Using the cost and revenue information shown for Dekalb, Inc., determine how the costs, revenue, and cash flow Items would be affected by three possible exchange rate scenarios for the New Zealand dollar (NZ$): (1) NZS = $0.55, (2) NZS $0.60, and (3) NZ$ 50.65. (Assume U.S. sales will be unaffected by the exchange rate.) REVENUE AND COST ESTIMATES: DEKALB, INC. (IN MILLIONS OF U.S. DOLLARS AND NEW ZEALAND DOLLARS) U.S. Business Sales $1,000 Cost of Materials 650 Operating 350 Expenses New Zealand Business NZ$900 300 0 Interest Expense Cash Flow 250 -$250 0 NZ$600 Assume that NZ$ earnings will be remitted to the U.S. parent at the end of the period. Ignore possible tax effects. Round your answers to the nearest dollar. NZ$$0.55 NZ$-$0.60 NZS - $0.65 Sales U.S. $ 1,000 $ 1,000 $ 1,000 New Zealand NZ$900- NZ$900- NZ$900 - Total $ $ $ Cost of Materials U.S. New Zealand NZ$300 = Total Operating expenses Interest expenses $ 650 NZ$300- $ 350 250 650 NZ$300- 350 250 650 $ 350 $ 250 $ Cash flow The preceding table shows that Dekalb Inc. Is adversely affected by a -Select- New Zealand dollar value.
Using the cost and revenue information shown for Dekalb, Inc., determine how the costs, revenue, and cash flow Items would be affected by three possible exchange rate scenarios for the New Zealand dollar (NZ$): (1) NZS = $0.55, (2) NZS $0.60, and (3) NZ$ 50.65. (Assume U.S. sales will be unaffected by the exchange rate.) REVENUE AND COST ESTIMATES: DEKALB, INC. (IN MILLIONS OF U.S. DOLLARS AND NEW ZEALAND DOLLARS) U.S. Business Sales $1,000 Cost of Materials 650 Operating 350 Expenses New Zealand Business NZ$900 300 0 Interest Expense Cash Flow 250 -$250 0 NZ$600 Assume that NZ$ earnings will be remitted to the U.S. parent at the end of the period. Ignore possible tax effects. Round your answers to the nearest dollar. NZ$$0.55 NZ$-$0.60 NZS - $0.65 Sales U.S. $ 1,000 $ 1,000 $ 1,000 New Zealand NZ$900- NZ$900- NZ$900 - Total $ $ $ Cost of Materials U.S. New Zealand NZ$300 = Total Operating expenses Interest expenses $ 650 NZ$300- $ 350 250 650 NZ$300- 350 250 650 $ 350 $ 250 $ Cash flow The preceding table shows that Dekalb Inc. Is adversely affected by a -Select- New Zealand dollar value.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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