FINANCIAL

Ch :
INTERNATIONAL MANAGEMENT
01 .

Decentralized Cash
Mngt
Since Swiss
it will invest it
subsidiary is
running
there
cash
Surplus ,

locally
& will be no

cash requirement placed by Swiss

Subsidiary
Cat
of
Cash Reg
"

Canadian Sub [ $2 -5900,000

,
[ $1.58 $15822785
UK Sub £30,09000 ✗ $1.57 $ 4710000

TOTAL § 20532785

Centralized Cash
Management
Swiss Sub $
Surplus
- 5ft ,
-50,090005ft -48 10135135

Deficit
-

Canadian Sub [ $2 -5900,000

,
( $1.58 $15822785
Deficit
-

UK Sub £30,09000 ✗ $1.57 $ 4710000

Net Requirement .

$10397050
Comment : Thus we can see that in case
of centralized
cash Mngt US MNC needs to
provide
lesser
funds .
016 .

Issue
Size net
of issue $4.02
exps crores
=

Issue
Fxps =

21.0J Issue
Size
.
'

Gross Issue Size = $4.024 =

$ 4.10.20.408
1- 0-02

Cal
o Proceeds
"

GDR
_

per
share Price £180
Less : Issue discount @ to :/ 18

Share Issue Price 3102

of
✗ No - shares
6
each GDR
underlying
Issue Price 2=972
per GDR
Exch Rate 511--2=42
Issue Price $23.14
per 9D(
$ 4,10 20,408
of GDRS to be
-
: No -

,
=

issued $23.14

=
17,7-2,706 GDR 's

Cost
of GDR Issue

Ke
Dip
=

+ 9

= 1 .
-5 008
+

180×0.90×0-98

= 8- 94%
 017 .

WN # 1

Amt to be borrowed $4 -50mn

£ $2
Spot Rate ,
-

.
. . . . - - - -
- -
- -

in £5 £ 225mn

Add : Interest @ 121 .

27mn

Ant to be at Yr 1 £ 252mn
repaid
Scenario 1 :
*

Cost £2 -52mn $2.10 $4 -50mn

of Borrowing
= ✗ -

$450 Mn

=
17.6%
*
£ , =
$2 -15%
app
i. e. £1 =
$2 -10

Cal Forward Rates

"
021
-

F1
It It =
FIxo.gg Step 1 : Calc
ignoring
Din Real
Jo terms
1- +
If G-
step 2 : $1 __
[
F' ✗
Year deploy it
-
'

1 : 0-99 .

£ is .

ing
=

'll deduct :/
'

1
I -01 62
. . we

hence $0.99 -_

[ F1
%
F1
£64.49 $1- OR
_

. .
=

$1 =
Eft
o.gg

writing formula
2 : 1.045 Fz ✗ 099 but while
= _

7008 have to F
£64.49
"

by
"

we x 0.99

solving
"
that while
-

so eq
Fz= £87
'

-53 the result found LHS on

. .
.

divided 0-99
gets by
 3 :
1%4,2-3=-5×0-99
£67.53
Fz= £70.16
'

- .

4 : 1.05
=
Exo .gg
TOE
£70.16
Fy= £73.53
'

. .

t.co#=F-5z!j?f-z
-5 :

1. 014

-7-5=2-576-69
'

Cal
of( Effective of
"
Cost FCB Antin
_

inn

Year Cf 's in $ ) Fxch .

Cf 's Pv PV

@ lit
Principal lntt Total Rate in
-z @ 12-1.

511=2
Charges
+300-600×0-657 +296.1 62 -118358
0 -

1 +300 (22-5) +277.5 64.49 +17896

40-2 -40.2 67.53 -2713

2

3 39 -39 70.16 -2736

4 43.2 43.2
-

73-53 -3177
5- ( )
600 45.6 -645.6 76.69 -49511

NPV -1197 +113

Using Interpolation : -

= ii. + -1197
( lay .
-

)
lit
-

1197 -
( 113)
= 11.911 .
 Cal forward Rates using
"

Rate
_

Working of
024 .
Note 1 : Intl

Parity Theorem
1- + 8h
=
So
A-
1- +
of

Year 1 : 1+0.09
=
2 .

G- = I -9633
.
.

1-10-07 F1

Fz =
1.9273

-53=1.8919

1-4=1.8572

Cal "
lakhs
of
Antin
-

NPV

Cf 's Fxch .
Cf 's PV
Year in FA $ Rate in I @ 10%

1 75 1.9033 38 - 2

2 95 1-9273 49.29

3 125 1.8919 86-07

4 135 1.8572 7-2-69

PY 1-52.04
Inflows
less :
Plloutflows 125
C- 1751250
2-
NPV 1-
27.04