(Doc) International Finance Assignment With Solution

Running head: INTERNATIONAL FINANCE
International Finance
Name of the Student:
Name of the University:
Author’s Note:

INTERNATIONAL FINANCE1
Table of Contents
Introduction......................................................................................................................................2
Discussion and Analysis..................................................................................................................2
Project Analysis...........................................................................................................................2
Economy Analysis.......................................................................................................................3
Cash Flow Analysis.....................................................................................................................3
Foreign Exchange Exposure/Risk................................................................................................5
Weighted Average Cost of Capital..............................................................................................5
Conclusion.......................................................................................................................................6
Recommendations............................................................................................................................7
References........................................................................................................................................8
Appendix..........................................................................................................................................9

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Introduction
The project investment analysis of the company has been done with the help of the
capital investment that will be done by the Hatfield Manufacturing Company for the purpose of
increasing the business operations of the company. The project investment will be done in
Turkey whereby the company will be investing around TL 110 Million, which would be
including the cost of plant as well as the cost of machinery that the company will be using for the
purpose of its operations. All the cash investment that the company expects to incur will be done
in the Turkish Currency. The evaluation and the final value derived in terms of Turkish Currency
will be converted into the UK British Pound for the purpose of evaluating the financial viability
of the project. The key reason that the company is considering or undertaking for the purpose of
expanding the business operations in Turkey economy is primarily due to the positive economic
factors that would be helping the company operate at a lower cost of labor and other costs that
the company would be incurring. Increased efforts from the Turkish Government in terms of tax
cuts or lower tax rates on the profitability earned are some of the other key reason for which the
investment is done in the Turkish Economy.
Discussion and Analysis
Project Analysis
The project investment that has been done by the company is well considered from the
view point of investment in Turkish Economy whereby the Hatfield Company will be investing
around TL 115 Million and of which 15 Million will be the considerable amount for the
Machinery investment done. The machinery will be treated as a non-cash expense which would

INTERNATIONAL FINANCE3
be charged on a straight line basis for the company. The annual revenue that would be earned by
the company from selling the product will be the primary source of income for the Hatfield
Company Investment Project (Coleman et al. 2013). It is important to note that the expenses that
the company will be incurring will be primarily in the form of Variable Cost, Labour Costs and
Fixed Costs that the company will be incurring for the term period. The term period of
investment for the project will be five years whereby the investment viability would be
considered.
Economy Analysis
It is important that the economy analysis or country analysis should be well conducted by
the company with the help of macro-economic and business factors that might influence the
operations and the overall profitability of the project investment that would be done. The
economic analysis of the economy was viewed in terms of inflation level which could be well
compared or analysed with the help of UK CPI % which has been remained constant in the trend
period of 10-years that has been analysed (Schlegel, Frank and Britzelmaier 2016). The inflation
level in Turkey economy has been comparatively very high as compared to the UK economy
which in turn has led to the depreciation of the YTL/£ which has fallen considerably from 2.8890
in the year 2013 to around 4.3909 YTL/£ in the year 2015. However, some of the key positive
factors that would be positively affecting the business operations of the company will be
primarily in the form of cheap labour availability and the costs of operation that is the variable
cost that would be incurred in the business operations of the company.
Cash Flow Analysis
The cash flow analysis would be done based on the major cash inflows for the company
which will be coming from the revenue of sales of products that the company expects to sell to