International Business Finance Assignment
Added on 2021-04-21
11 Pages2234 Words95 Views
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[AIB subject title and subject AQF Level][Student name][Student number][International Business Finance]Word count: [.. insert word count here ..]1
Executive summaryThe assessment mainly evaluates the financial performance of the new project, which couldhelp in addressing the financial viability of the new project. In addition, relevant financialperformance is evaluated on the basis of difference circumstance and scenarios, which couldhelp in identifying the financial viability of the new project. Moreover, from the scenarioanalysis financial stability and profitability generated from the project could be identified.Hence, it is recommended for the company to conduct the project with the identifiedmeasures, which might help the US parent company to increase their returns frominvestment. 2
Table of contentsa. Calculating the Free cash flow of the project:....................................................................4b.(i) Hedging $2 million:........................................................................................................5b.(ii) Not hedging $2 million..............................................................................................5c.(i) Using the debt option from BRL:...................................................................................6c.(ii) Using the debt option from US:.................................................................................7d. Factors driving the difference between two factors:..........................................................7e. Impact of financial crisis on the project:............................................................................8Conclusion and recommendation:..........................................................................................9Reference and Bibliography list...........................................................................................103
IntroductionThe assessment is mainly conducted to identify the financial viability of the new projectthat will be conducted in the Brazil by the US Company. The calculations are mainlyconduced to understand the expenses and revenue, which is portrayed by the new project. Inaddition, the financial performance of the company has mainly evaluated, which couldgenerate higher return for US company and Brazilian subsidiary. The cash generated from theproject is evaluated on certain circumstances and determine whether the operation willgenerate high rate of return from investment.a. Calculating the Free cash flow of the project:ParticularsYear 1Year 2Year 3Year 4Year 5Revenue BRL 25,200,000.00 BRL 26,712,000.00 BRL 28,314,720.00 BRL 30,013,603.20 BRL 31,814,419.39 Variable cost BRL 11,200,000.00 BRL 11,872,000.00 BRL 12,584,320.00 BRL 13,339,379.20 BRL 14,139,741.95 Fixed cost BRL 2,000,000.00 BRL 2,120,000.00 BRL 2,247,200.00 BRL 2,382,032.00 BRL 2,524,953.92 Depreciation facilities BRL 7,200,000 BRL 7,200,000 BRL 7,200,000 BRL 7,200,000 BRL 7,200,000 Depreciation machine BRL 3,600,000 BRL 3,600,000 BRL 3,600,000 BRL 3,600,000 BRL 3,600,000 Profit Before tax BRL 1,200,000.00 BRL 1,920,000.00 BRL 2,683,200.00 BRL 3,492,192.00 BRL 4,349,723.52 Tax BRL 300,000.00 BRL 480,000.00 BRL 670,800.00 BRL 873,048.00 BRL 1,087,430.88 4
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