Question
In: Finance
Cemerlang Inc. is a conglomerate company which has four subsidiaries located in Brunei, Malaysia, United Kingdom,...
Cemerlang Inc. is a conglomerate company which has four subsidiaries located in Brunei, Malaysia, United Kingdom, and Switzerland. The exchange rates available for the company are MYR2.9000/BND, GBP0.4000/BND and BND1.2500/CHF. The following is the inter- subsidiary payments matrix for Cemerlang Inc in multiple currency.
|
RECEIVING |
PAYING SUBSIDIARY (in millions) |
|||
|
SUBSIDIARY (in millions) |
Brunei |
Malaysia |
United Kingdom |
Switzerland |
|
Brunei |
MYR58 |
GBP10 |
CHF12.5 |
|
|
Malaysia |
BND10 |
GBP12 |
CHF16.25 |
|
|
United Kingdom |
BND 20 |
MYR29 |
CHF 20 |
|
|
Switzerland |
BND15 |
MYR43.5 |
GBP6 |
|
- Convert all the cash flows into Brunei Dollar (BND) and fill in
the table cells below to show the intersubsidiary payments matrix
for Cemerlang Group. If the transaction cost is 2%, how much the
company need to pay (in BND) if they decided not to do any netting?
(7marks)
RECEIVING SUBSIDIARY
(BND in
millions)
PAYING SUBSIDIARY (BND in millions)
Brunei
Malaysia
United Kingdom
Switzerland
Brunei
Malaysia
10
United
Kingdom
20
Switzerland
15
Transaction cost in BND with no netting:
Solutions
Expert Solution
| RECEIVING SUBSIDIARY:BRUENI | ||||||||
| A | Calculation | |||||||
| Paying Subsidiary | Amount in BND | |||||||
| Malayasia | 20 | (58/2.9000) | ||||||
| United Kingdom | 25 | (10/0.4000) | ||||||
| Switzerland | 15.625 | (12.5*1.2500) | ||||||
| RECEIVING SUBSIDIARY:MALAYASIA | ||||||||
| Paying Subsidiary | Amount in BND | Calculation | ||||||
| United Kingdom | 30 | (12/0.4000) | ||||||
| Switzerland | 20.3125 | (16.25*1.25) | ||||||
| RECEIVING SUBSIDIARY:UNITED KINGDOM | ||||||||
| Paying Subsidiary | Amount in BND | Calculation | ||||||
| Malayasia | 10 | (29/2.9000) | ||||||
| Switzerland | 25 | (20*1.25) | ||||||
| RECEIVING SUBSIDIARY:SWITZERLAND | ||||||||
| Paying Subsidiary | Amount in BND | Calculation | ||||||
| Malayasia | 15 | (43.5/2.9000) | ||||||
| United Kingdom | 15 | (6/0.4) | ||||||
| PAYING SUBSIDIARY | ||||||||
| RECEIVING SUBSIDIARY | Brunei | Malayasia | United Kingdom | Switzerland | TOTAL | |||
| Brunei | X | 20 | 25 | 15.625 | 60.625 | |||
| Malayasia | 10 | X | 30 | 20.3125 | 60.3125 | |||
| United Kingdom | 20 | 10 | X | 25 | 55 | |||
| Switzerland | 15 | 15 | 15 | X | 45 | |||
| TOTAL | 45 | 45 | 70 | 60.9375 | 220.9375 | |||
| Company need to pay transaction cost | 4.41875 | MillionBND | (220.9375*2%) | |||||
jeff jeffy answered 2 years agoRelated Solutions
Cemerlang Inc. is a conglomerate company which has four subsidiaries located in Brunei, Malaysia, United Kingdom,...
Cemerlang Inc. is a
conglomerate company which has four subsidiaries located in Brunei,
Malaysia, United Kingdom, and Switzerland. The exchange rates
available for the company are MYR2.9000/BND, GBP0.4000/BND and
BND1.2500/CHF. The following is the inter- subsidiary payments
matrix for Cemerlang Inc in multiple currency.
RECEIVING
PAYING SUBSIDIARY (in
millions)
SUBSIDIARY
(in millions)
Brunei
Malaysia
United Kingdom
Switzerland
Brunei
MYR58
GBP10
CHF12.5
Malaysia
BND10
GBP12
CHF16.25
United Kingdom
BND 20
MYR29
CHF 20
Switzerland
BND15
MYR43.5
GBP6
Perform multilateral netting by...
Cemerlang Inc. is a conglomerate company which has four subsidiaries located in Brunei, Malaysia, United Kingdom,...
Cemerlang Inc. is a conglomerate company which has four
subsidiaries located in Brunei, Malaysia, United Kingdom, and
Switzerland. The exchange rates available for the company are
MYR2.9000/BND, GBP0.4000/BND and BND1.2500/CHF. The following is
the intersubsidiary payments matrix for Cemerlang Inc in multiple
currency.
RECEIVING
SUBSIDIARY
(in millions)
PAYING SUBSIDIARY (in million)
Brunei
malaysia
UK
Switzerland
Brunei
MYR58
GBP10
CHF12.5
malaysia
BND10
GBP12
CHF16.25
UK
BND20
MYR29
CHF20
Switzerland
BND15
MYR43.5
GBP6
a. Convert all the cash flows into Brunei Dollar...
Mentari Inc. is a conglomerate company that has four subsidiaries located in Brunei, Malaysia, United Kingdom,...
Mentari Inc. is a
conglomerate company that has four subsidiaries located in Brunei,
Malaysia, United Kingdom, and Switzerland. The exchange rates
available for the company are MYR2.9000/BND, GBP0.4000/BND and
BND1.2500/CHF. The following is the inter- subsidiary payments
matrix for Mentari Inc in multiple currencies.
RECEIVING
PAYING SUBSIDIARY (in
millions)
SUBSIDIARY
(in millions)
Brunei
Malaysia
United Kingdom
Switzerland
Brunei
MYR58
GBP10
CHF12.5
Malaysia
BND10
GBP12
CHF16.25
United Kingdom
BND 20
MYR29
CHF 20
Switzerland
BND15
MYR43.5
GBP6
Convert all the cash...
2. A multinational company has three subsidiaries located in the United States, Switzerland, and Great Britain. The...
2. A multinational company has three subsidiaries
located in the United States, Switzerland, and Great Britain. The
company recently set up a multilateral netting center to help
manage its foreign exchange exposure. Listed below are the average
monthly invoices sent from each country to each of the other
subsidiaries with which it does business. Calculate the net flows
that will occur as a result of the new netting system. The company
uses the U.S. dollar as the common referencing currency.
Existing...
Located in the United Kingdom, BestHomeInsurance has expanded to provide homeowners insurance in a number of...
Located in the United Kingdom, BestHomeInsurance has expanded to
provide homeowners insurance in a number of European jurisdictions.
Charles was previously a senior underwriter and now Head of
Strategy for BestHomeInsurance’s online strategy. Charles has seen
how the company’s business has grown rapidly through its online
presence in a number of European countries and he is concerned that
growth has been too rapid. As one of his first tasks in his new
role Charles has decided to write up a...
Merrythought is a business that makes teddy bears, located in Ironbridge, Shropshire, in the United Kingdom....
Merrythought is a business that makes teddy bears, located in
Ironbridge, Shropshire, in the United Kingdom. The business was
founded years ago by Gordon Holmes. It is a private limited
company, still owned by the Holmes family and is currently run by
Gordon Holmes’s great-granddaughter Sarah Holmes.
The business has approximately 25 employees and does all its
manufacturing in England. It makes a large number of different
styles of teddy bears, ranging from “traditional British bears, to
special occasion bears...
Acme, Inc., a multinational company based in the United States, has a large subsidiary located in...
Acme, Inc., a multinational company based in the United States,
has a large subsidiary located in Beijing, China. Acme is audited
by an international accounting firm headquartered in the United
States; its subsidiary is audited by the Chinese affiliate of that
firm. Under U.S. auditing standards, what responsibilities, if any,
does Acme's U.S. audit firm have to supervise or oversee the audit
of the Chinese subsidiary? Would these responsibilities be
different under International Standards of Auditing?
A company based in the United Kingdom has an Italian subsidiary. The subsidiary generates €30,000,000 a...
A company based in the United Kingdom has an Italian subsidiary.
The subsidiary generates €30,000,000 a year, received in equivalent
semiannual installments of €15,000,000. The British company wishes
to convert the euro cash flows to pounds twice a year. It plans to
engage in a currency swap in order to lock in the exchange rate at
which it can convert the euros to pounds. The current exchange rate
is €1.1227/£. The fixed rate on a plain vanilla currency swap in...
A diversified financial conglomerate has six units (subsidiaries), with each unit focusing on its own specialization:...
A diversified financial conglomerate has six units
(subsidiaries), with each unit focusing on its own
specialization:
■ thrift operations,
■ consumer finance operations,
■ mutual fund operations,
■ securities firm operations,
■ insurance operations, and
■ consulting for pension funds (managing long-term
bond portfolios for some pension funds).
1.
Your assignment is to identify the units that will be less
adversely affected by the recession. You believe that the units’
different characteristics will cause some of them to be affected
more than others.
2.
Currently, each...
The total price of purchasing a basket of goods in the United Kingdom over four years...
The total price of purchasing a basket of goods in the United
Kingdom over four years is: year 1=£840, year 2=£870, year 3=£900,
and year 4=£970. Calculate two price indices, one using year 1 as
the base year (set equal to 100) and the other using year 4 as the
base year (set equal to 100). Round to the nearest 100th. Then,
calculate the inflation rate between year1 and year 4 based on the
first price index series. If you...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- If one calculated a standard deviation of 18.38% for a security with an expected return of...
- The Declaration of Independence contends that "whenever any Form of Government becomes destructive" of individual life,...
- Where did Hip Hop originate? Who are some of the early innovators of Rap? What are...
- JAVA Remember the childhood game “Rock, Paper, Scissors”? It is a two-players game in which each...
- Assess potential global strategies for the organization. What are the four types of global strategies What...
- Consider the following abbreviated financial statements for Weston Enterprises: (Do not round intermediate calculations.) WESTON ENTERPRISES...
- Financing Deficit Stevens Textile Corporation's 2019 financial statements are shown below: Balance Sheet as of December...
ADVERTISEMENT