Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:ORANGE PRODUCTS INC.
Orange Products Inc. is a producer of juice drinks in Florida, USA. Until now, the company
has confined its operations and sales to the United States, but its CEO, Ray Jalkio wants to
expand into the Pacific Rim. The first step is to set up sales subsidiaries in Japan and Australia.
then to set a production plant in Japan, and finally to distribute the product throughout the Pacific
Rim. The firm's CFO, Janet Jackson, is enthusiastic about the plan, but she is worried about the
implications of the foreign expansion on the firm's financial management process. She has asked
your group to develop a tutorial package that explains the basics of multinational financial
management. The tutorial will be presented at the next management committee (ManCom)
meeting.
Consider the following exchange rates:
US Dollar Required to buy
one unit of Foreign Currency
Number of units of Foreign
Currency per US Dollar
Japanese Yen
Australian Dollar
0.0091
109.89
0.760
1.316
Transcribed Image Text:2. Orange Products begins producing the same liter of orange juice in Japan. The
product costs 250 yen to produce and ship to Australia, where it can be sold for 6
Australian dollars. How much is the US dollar profit on the sale?
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