Finanzas Internacionales

Ejercicios de la tarea 9

Gerardo Bonilla Carrillo

Maestría en Finanzas
29 de junio de 2020
nacionales

a tarea 9

A01685351

Finanzas
de 2020

Profesor titular: Dr. Gerardo C. Salazar Viezca

Profesora Tutora: M. Karla Macías González

Capítulo 18: Pregunta 12, Problemas 1 y 2

12. Define the concept of a real option. Discuss some of the various real options a firm can be confronted with w

The real option is the right to be able to make business decisions for the benefit of a party. And it is essential to c
an effect with a high impact on the profitability and growth of a company. Based on the actual options, managem
options and select the most appropriate one. Conceptually the actual option is based on the financial option.

Below, the real options that can be presented in real projects are:
●Option to expand: The company has the option to make more investments to expand the business in the future
●Option to abandon: option with the company to stop the existing project.
●Option of waiting: The business decided to expand in the future, but due to some circumstances, they made de
●Option to contract: when you do not have good results in the business, profitably, you have the option to close
●Option to change: when the business does not achieve favorable results under certain circumstances, the busin
is resumed.

1. The Alpha Company plans to establish a subsidiary in Hungary to manufacture and sell fashion wristwatches. A
is equity financed. The remainder is financed with debt. Alpha consid-ered its current capital structure optimal. T
estimated at HUF2,400,000,000, of which HUF1,800,000,000 is to be financed at a below-market borrowing rate
what amount of debt it should use in calculating the tax shields on interest payments in its capital budgeting ana

Total assets $ 70.00 MM $

Equity financed $ 45.00 MM $
HUF 2,400,000,000.00
HUF 1,800,000,000.00 below market

Optimal debt ratio Alpha Co.

Debt/assets = 35.71% Alpha will overstate the tax shield on interest payme
project will only increase borrowing capacity by:
The project debt ratio is: HUF2400000000 x 0.357142857142857 =
HUF1,800/HUF2,400= 75.0%

2. The current spot exchange rate is HUF250/$1.00. Long-run inflation in Hungary is estimated at 10 percent ann
expected to hold between the two countries, what spot exchange rate should one forecast five years into the fut
HUF 250/$1.0
Inflation Hungary 10%
Inflation United S. 3%
Years future 5
(HUF250*(1+.1)^5)/((1+.03)^5) = HUF 347.310018 /$1.00
tions a firm can be confronted with when investing in real projects.

nefit of a party. And it is essential to choose the right business opportunity, since it represents
Based on the actual options, management can analyze and evaluate a series of commercial
n is based on the financial option.

s to expand the business in the future.

o some circumstances, they made deferred business decisions.

ofitably, you have the option to close the project in the future.
nder certain circumstances, the business is closed and when conditions improve, the business

cture and sell fashion wristwatches. Alpha has total assets of $70 million, of which $45 million
ts current capital structure optimal. The construction cost of the Hungarian facility in forints is
ed at a below-market borrowing rate arranged by the Hungarian government. Alpha wonders
payments in its capital budgeting analysis. Can you offer assistance?

state the tax shield on interest payments if it uses the 75% figure because the proposed
y increase borrowing capacity by:
00000 x 0.357142857142857 = HUF 857142857.143

ungary is estimated at 10 percent annually and 3 percent in the United States. If PPP is
uld one forecast five years into the future?
Capítulo 19: Preguntas 1 y 2

1. Describe the key factors contributing to effective cash management within a firm. Why is the cash managemen

An effective cash management system has to be based on a cash budget where a project manages to have cash i
period of time. It provides systematic cash and cash disbursement in addition to considering the mobilization of f
arise, you are covered by loans with the most favorable rates and if you have surplus funds, they are invested at
advantage. . Within a multinational, the complexity of the cash management process is complicated because the
currencies and, therefore, the cost for currency transactions is an additional dimension to manage.

2. Discuss the pros and cons of a MNC having a centralized cash manager handle all investment and borrowing fo
each affiliate having a local manager who performs the cash management activities of the affiliate.

Within the centralized cash management system, the cash manager must have an overview of the MNC's cash re
possibility that the funds will be misplaced in some type of wrong currency, also under that global vision, the pre
can be handled more efficiently. In addition to the above, a centralized system has the opportunity to invest exce
rates and borrow to cover the lack of cash at the most favorable rates. In a decentralized system, the local cash m
for managing the member's cash needs than the centralized system. Therefore, local cash management The posi
level positions within the affiliate or MNC. Additionally, under a decentralized system, better relationships with lo
affiliate performs more cash management functions at the local level. This could offer significant results if the fun
overall, the benefits of a centralized cash management system tend to outweigh its disadvantages.
rm. Why is the cash management process more difficult in a MNC?

project manages to have cash inflows and outflows in a planning

considering the mobilization of funds, in which when cash shortages
plus funds, they are invested at the rates with the greatest
cess is complicated because the business deals in a variety of
ension to manage.

all investment and borrowing for all affiliates of the MNC versus
es of the affiliate.

n overview of the MNC's cash requirements. Expecting thus a lower

under that global vision, the presence of transactions for the MNC
as the opportunity to invest excess cash at the most advantageous
tralized system, the local cash manager will have more responsibility
ocal cash management The position serves as good training for high-
tem, better relationships with local banks are presented as the
offer significant results if the funds are to be borrowed locally. But
its disadvantages.