Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Kaplan Revision Kit Q5 PartSea
- This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
- AuthorPosts
- September 26, 2018 at 7:21 pm #475802
I want to to know what the relevant cost would be, for at least yr 2 ,for an investment appraisal in the following aspect of the question:
In a foreign direct investment strategy a UK company,Partsea,will have to import components from another of Partsea’s subsidiaries in Bottoniland to the target country of Hotternia,from year 2 onwards at a fixed price of 5 Bottoniland tala(Bt) per unit. 25% of this price represents profit element to the Bottoniland company. Sales units will be 1m units in yr 1 but 2.5m units per year for the remainder of the planning horizon.
Inflation Exchange Rates
Yr UK Hotternia Bottoniland $H/E Bt/E $H/Bt
spot 15.8 4.2 3.76
1 2% 10% 5% 17.04 4.32 3.94
2 3% 8% 5% 17.87 4.41 4.05September 27, 2018 at 9:14 am #475849But you have an answer in your Revision Kit and the cash flow at time 2 is 51M $H !!
If you are asking how this was calculated, then there are 2.5M units at a fixed price of 5 Bt and the exchange rate is 4.05 $H/Bt
2.5M x 5 x 4.05 = 50.625M $H
- AuthorPosts
- You must be logged in to reply to this topic.