Questions from Financial Management

Q: Provide two reasons why an MNC’s strategy of acquiring a foreign target

Provide two reasons why an MNC’s strategy of acquiring a foreign target could backfire. That is, explain why the acquisition might result in a negative NPV.

Q: Alaska, Inc., would like to acquire Estoya Corp., which

Alaska, Inc., would like to acquire Estoya Corp., which is located in Peru. In initial negotiations, Estoya has asked for a purchase price of 1 billion Peruvian new sol. If Alaska completes the purcha...

Q: Senser Co. established a subsidiary in Russia two years ago.

Senser Co. established a subsidiary in Russia two years ago. Under its original plans, Senser intended to operate the subsidiary for a total of four years. However, it would like to reassess the situa...

Q: Colorado Springs Co. plans to divest either its Singapore subsidiary or

Colorado Springs Co. plans to divest either its Singapore subsidiary or its Canadian subsidiary. Assume that if exchange rates remain constant, the dollar cash flows that each of these subsidiaries wo...

Q: San Gabriel Corp. recently considered divesting its Italian subsidiary, but

San Gabriel Corp. recently considered divesting its Italian subsidiary, but determined that the divestiture was not feasible. Therequired rate of return on this subsidiary was 17 percent. In the last...

Q: Ethridge Co. of Atlanta, Georgia, has a subsidiary in

Ethridge Co. of Atlanta, Georgia, has a subsidiary in India that produces products and sells them throughout Asia. In response to the September 11, 2001, terrorist attacks on the United States, Ethrid...

Q: Merton, Inc., has a subsidiary in Bulgaria that it fully

Merton, Inc., has a subsidiary in Bulgaria that it fully finances with its own equity. Last week, a firm offered to buy the subsidiary from Merton for $60 million in cash, and the offer is still avail...

Q: Blades, Inc., is a U.S.-based company

Blades, Inc., is a U.S.-based company that has been incorporated in the United States for 3 years. Blades is a relatively small company, with total assets of only $200 million. The company produces a...

Q: Sunbelt, Inc., plans to purchase a firm in Indonesia.

Sunbelt, Inc., plans to purchase a firm in Indonesia. It believes that it can install its operating procedure in this firm, which would significantly reduce the firm’s operating expenses. However, the...

Q: Florida Co. produces software. Its primary business in Boca Ratonis

Florida Co. produces software. Its primary business in Boca Ratonis expected to generate cash flows of $4 million at the end of each of the next three years, and Florida expects that it could sell thi...