Question 1 (8 mark): The Vinfast Electric moto company currently wants to

build a showroom branch and business warehouse in Thailand. Use the following

information to evaluate the project.

- Initial investment capital for showroom & warehouse is 3,000,000 Bath, one

time payment, and need to add about 100,000,000 Bath as working capital to

import goods.

- Price, quantity demanded, and variable cost for the average of each exported

product and the exchange rate are estimated as follows

-. Price: (Bath): 30,000 Bath

- Product demand

Year 1: 2,000

Year 2: 2,100

Year 3: 2,200

- Cost of importing goods from Vietnam: 7,000,000 VND/product

- Fixed costs (eg office costs) are estimated at 1,000,000bath/year

- The branch uses working capital to support business operations. The company

intends to borrow from a bank in Thailand for X% of working capital , mortgaged

with the same goods, with an interest rate of 12%/year (excluding tax) (X is the

two digit of your SV code) . Loan capital is paid annually, principal payment will

be paid at the end of year 3.

The Thai governments apply 25% corporate tax and a 10% profit transfer tax

(No other taxes). All funds collected by the branch can be transferred to the

parent company at the end of the year.

- The current exchange rate of Bath is 500VND/bath.

- Showroom will depreciate over 3 years using the straight-line method.

- The project will end after 3 years. The company will then decide to invest

further or not if it achieves a positive NPV. The required profit of the project is

20%/year.

a. Determine the NPV of this project? Clearly show how to calculate by excel file,

then note the result here. (2mark)

b. If inflation is 10%/year, how is the NPV of the project? Assume that Inflation

affects both cost & price, but not interest rate. (1 mark)

c. In the bad scenario, the sale is just a half of expection. The working capital,

therefore, is half too. What happens with NPV? (1 mark)

Note: For a,b,c Excel file should have name & ID at the top, and transfer to

pdf/word , then submitted to Msteam , clearly name as follow”

“studentID_Fullname.pdf”,

d. Assuming the company expects the exchange rate to fluctuate according to a

normal distribution, the fluctuation range of the VND/bath exchange rate is 0.1

%/month. With 99% confidence, what is the company's maximum loss in the

first year (1 mark)? How much VAR for the whole project? (1 mark) (Assuming

that the company only pay COGS at the beginning of each year and collects money

at the end of each year).

e. Assume that Vinfast needs to import from all the COGS through export

contract, and each product sold at (~7,000,000 VND) and receive payment in the

end of each year. The exchange rate is fluctute 0.1%/month . In the worst case

(99% confident) can Vinfast uses MM market to hedge the transaction risk for

this contract in the first year, and is it effective? (assume that the interest rate of

VND is only 6%) (1 mark)

f. If the exchange rate is unchanged throughout 3 years, and Vinfast shareholders

require a profit margin for the project of 40% or more. Should the company

invest? If investing, the company should borrow at least how much % of capital.

(Assuming the company can borrow up to 95% of working capital, the loan ratio

does not affect the investor's required rate, but limits borrowing) (1 marks)

Question 2. Please analyse an MNC company working in Vietnam (Samsung,

Big4, Starbuck, Google, Unilever, Capitaland….) , considering the following:

a. the country risk (1 mark),

b. Agency problem (1 mark)

Keep the answer short, bullet and simple.