bs Away, an American gaming MNC with a subsidiary in Thailand expects to receive 30 million, 40 million, 40 million, and 50 million Thai bahts (TB) in net cash flows from its subsidiary during the next 4 years. The financial managers expect the exchange rates for the next 2 years will be $1=TB40 and the following 2 years $1=TB30. They have also computed their firm’s discount rate or the weighted average cost of capital to be 10%. What is the value of the subsidiary?

bs Away, an American gaming MNC with a subsidiary in Thailand expects to receive 30 million, 40 million, 40 million, and 50 million Thai bahts (TB) in net cash flows from its subsidiary during the next 4 years. The financial managers expect the exchange rates for the next 2 years will be $1=TB40 and the following 2 years $1=TB30. They have also computed their firm’s discount rate or the weighted average cost of capital to be 10%. What is the value of the subsidiary?

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

ChapterP3: Part 3: Exchange Rate Risk Management

Section: Chapter Questions

Problem 4Q

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