CHMURA CO.

Role of WTO

Barrier Reduce barrier to international trade

Forum Act as forum for negotiation and settlement process
Trade Encourage trade by applying favourable policies
Reducing protectionist measure

Benefits

Retailed Other nation will also reduce against its

Trade Growth
Economy Growth
Political capital Growth
Drawbacks

Failure Developing and decline industry fail if protection not given

Unemployment Increase

Report to board of directors, Chmura Co

Introduction

Requirements This report provides …..

Project evaluation

NPV without option Negative ,reject

Real option As it is offer to sell (abandonment option )
Put option Cal. Using BSOP ,then added to NPV , not a real cash flow
NPV after option Positive ,accept
Assumption

Accurate Revenue , cost , taxation , investment , residual value , inflation

Exchange rate Reflects differential in inflation rate
Bilateral treaty Utilise full benefit and pay additional tax
Risk free rate Treasury bill rate equivalent to risk free rate
Manager assessment Of standard deviation is accurate
No uncertainty Bulud co fulfil its offer
BSOP assumptions Perfect market, constant interest rate, volatility constant
Additional business risk

Political risk Change of government , restriction on remittance

Economically stable Have infrastructure , protectionist policies not imposed again
Fiscal risk Tax rate not change adversely , tax allowable expense change
Regulation Health and safety law, employment law and land ownership restriction
Cultural risk Product mix may not suitable ,
Reputation risk Through operational error and quality failure
Recommendation

proceed If offer is reliable , sensitivity analysis indicate uncertainty acceptable , business risk mitigated
Not proceed If offer is not considered ; proceed if offer is not consider but have follow on opportunities
Complied by

Date