Chapter 17, Problem 3MC

a)

Summary Introduction

Case summary:

P Inc.’s CEO person M is considering expanding the geographic footprint of its line of dried and smoked low-fat opossum, ostrich, and venison jerky snack packs. Europeans may not be as accepting of opossum jerky as initial research suggests, so the expansion will proceed in steps. P Inc.’s CFO, person K, although enthusiastic about the plan, is nonetheless concerned about how an international expansion and the additional risk that entails will affect the firm’s financial management process. Manger recognizes that the expansion carries some risk. The tutorial will be presented at the next board of directors meeting.

To determine: The direct quotation and the direct quote for euros.

b)

Summary Introduction

To determine: An indirect quotation and the indirect quotation for k.

c)

Summary Introduction

To determine: The manner in which to compute the direct quote for k.

d)

Summary Introduction

To determine: The cross rate and the cross rates between euros and the kronor.

e)

Summary Introduction

To determine: The jerky sell for in country F.

f)

Summary Introduction

To determine: The dollar profit on the sale.

g)

Summary Introduction

To determine: The exchange rate risk.