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In: Finance

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
  1. Convert all the cash flows into Brunei Dollar (BND) and fill in the table cells below to show the intersubsidiary payments matrix for Mentari Group. If the transaction cost is 2%, how much the company needs to pay (in BND) if they decided not to do any netting?

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:                                     

  1. Perform multilateral netting by filling up the table below. If the transaction cost is 2%, how much the company needs to pay (in BND) if they decided to do multilateral netting?

RECEIVING

PAYING SUBSIDIARY (BND in millions)

SUBSIDIARY

(BND in millions)

Brunei

Malaysia

United Kingdom

Switzerland

Total receipt

Total Receipt/ (payment)

Brunei

Malaysia

United Kingdom

Switzerland

Brunei

Transaction cost in BND with multilateral netting:                                       

Solutions

Expert Solution

jeff jeffy answered 3 years ago
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