We have the following set of information:

US based MNC: Two subsidiaries

1 2 3 4 5

Year 1 Year 2 Year 3 Year 4 Year 5

Expected Exchange rates
US dollar vs INDR 50.00 47.50 45.13 42.87 40.73

US dollar vs BDT 80.00 84.00 88.20 92.61 97.24

Expected free cash flows (in millions)

India (in INDR) 500.00 500.00 500.00 500.00 5000.00
Bangladesh (in BDT) 900.00 900.00 900.00 900.00 9000.00
USA in dollar 400.00 400.00 400.00 400.00 4000.00

Weighted average cost of capital is 10%

Determine the value of the MNC

First, you convert the foreign cash flows into USD by using the expected exchange rates.
Secondly, you get the total of the cashflows for each period.
Third, you get the present value for each period.
Finally, you get the total of the present values.

Expected free cash flows (in millions)

expressed in US dollar

Y1 Y2 Y3 Y4 Y5
India 10.00 10.53 11.08 11.66 122.77
Bangladesh 11.25 10.71 10.20 9.72 92.55
USA 400.00 400.00 400.00 400.00 4000.00

Total free cash flows (in US dollar) 421.25 421.24 421.28 421.38 4215.33

(𝟒𝟐𝟏. 𝟐) (𝟒𝟐𝟏. 𝟐𝟒) (𝟒𝟐𝟏. 𝟐𝟖) (𝟒𝟐𝟏. 𝟑𝟖) (𝟒𝟐𝟏𝟓. 𝟑𝟑)

Present values in US dollar (@ 10% RRR) 𝟏. 𝟏𝟎 𝟏. 𝟏𝟎𝟐 𝟏. 𝟏𝟎𝟑 𝟏. 𝟏𝟎𝟒 𝟏. 𝟏𝟎𝟓
= = = = =
382.95 348.13 316.52 287.81 2617.39

$3952.80 in US
MNC value today (sum of the present values)
dollar

The value of the MNC is $3952.80 million