What is treasury?

18 Answers   HSBC,

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If Inventory Is Understated At The End Of The Year, What Is The Effect On Net Income?

0 Answers  

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why do u came to EXIM bank?

0 Answers  

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Explain About Openpages Model Risk Governance?

0 Answers   IBM,

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Dear sir... am student from(Business mgnt) TU, I got59% in 2nd sem' but i didn't attended for my 1st internal assesment exams in 1st sem' so, i got overall percentage up to 2nd sem' is 54%........ i can get 60% of marks till the complete of my course Q: Can i attend the interview in our college with this percentage? < ksk.chikka@gmail.com >

1 Answers   Capital IQ,

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What are T- Bills?

0 Answers   RBI,

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What is pan number and where we can use pan number?

0 Answers  

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I'm an MBA student. I need guidance to prepare for AMAZON COMPANY. can u pls post papers to ammuprathyu@ymail.com

0 Answers   Amazon, Bank Of America,

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What is the short cut to filter the information based on the monetary value all most from all report screens in Tally ERP 9?

0 Answers  

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What is typically higher the cost of debt or the cost of equity?

0 Answers  

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Hi Friends, I was working for a bank firm for 1.3 years and i hve resigned in april 2010.The reason for leaving the job was that my cousin had promised me a job in Saudi unfortunately i did not get any job after being there now i am back in my home town looking out for a job here.My question is all companies will ask Why did u leave your previous job? Please do post your answers and help me out in getting a job since it has been already 6 months i am, without a job.

4 Answers  

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Read the case given below and answer the questions given at the end. Krutika Designers Ltd is an Indian company engaged in designing shirts for an international shirt manufacturer. Its operations are currently restricted to designing shirts for the Indian market. The firm is interested in extending its operations to the European markets, but is restricted by its lack of knowledge about the latest fashions and trends prevailing there. Hence, the firm has decided to open an office in Finland for establishing a network in Europe that will give the firm access to the needed information. The firm feels that its does not have the capability of sustaining itself in the foreign markets in the long-term, and will be able to generate additional revenue from these activities only for the next 5 years. After that, the Finnish office will have to be closed down. The firm anticipates an initial investment of Rs.14 million. The project is expected to generate the following cash flows over the 5 years period. Year Cash flow (Finnish Marks) 1 2 3 4 5 10,00,000 20,00,000 50,00,000 50,00,000 30,00,000 These cash flows are expressed in terms of today’s money. The firm can claim depreciation in India according to the Straight Line Method. The salvage value from the project is expected to be nil. The Finnish Government does not provide any incentives for foreign investments. However, currently it is making an attempt to have better economic ties with India. Hence, it has decided to extend a loan of 50,000 marks to Krutika Designers. The loan will be at a concessional interest rate of 7%. The loan is to be repaid in 5 equal annual installments which will include the interest payments. The project will generate additional borrowing capacity of Rs.5 million for the firm. However, as the firm does not have any firm contract with the international shirt manufacturer, its domestic revenues are expected to be very volatile. Therefore, there is no surely that the firm will be able to absorb the tax benefits arising out of depreciation and additional borrowing capacity. The firm does not intend to indulge in any illegal money transfers. The current spot rate for the Finnish Mark is Rs.7.25/FM. The inflation rates in India and Finland for the next 5 years are expected to be 8% and 3% respectively. The exchange rate is expected to move in tandem with the inflation rates. Indian tax rate is 35% while Finnish tax rate is 40%. India and Finland have entered into a tax treaty whereby the earnings of the residents of one country are taxable in that country only. In India, the nominal risk-free interest rate is 11%. The same is 6% in Finland. The Indian nominal interest rate (including risk-premium) is 15%, while that in Finland is 9%. The nominal all-equity rate in India is 18%. 1. Comment on the financial viability of the project. 2. What are the different circumstances in which nominal all-equity discount rate and real all equity discount rate should be used for discounting the cash flows? Explain the rationale behind it. 3. Comment on the financial viability of the project if the firm is sure about being able to absorb the tax benefits arising out of depreciation and increased borrowing capacity. 4. Explain the concept of exchange risk and how it affects an international project. 5. How can the financial structure of a project be used to overcome repatriation restrictions? What are the additional benefits of such maneuvers?

0 Answers  

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