Perth International Co. Case Study – Accounting and Finance Assignment Help

Assignment Task

Task

Case Scenario:

Perth International Co., an Australian multinational company, forecasts 69 million Australian dollars (A$) earnings next year (i.e., year-one). In addition, it expects 52 million Chinese yuan (CNY), 47 million Indian rupees (INR) and 35 million Malaysian ringgit (MYR) proceeds of its three subsidiaries in year-one. It also forecasts the year-one exchange rates A$0.2819/CNY, A$0.0331/INR and A$0.5889/MYR.

Perth International will close its business in Australia after year-one and anticipates a 5.66 per cent increase in the year-one income of its subsidiaries in year-two. It has information that the current 4.39 per cent, 8.97 per cent, 13.5 per cent and 10.85 per cent nominal interest rate in Australia, China, India and Malaysia, respectively, will remain the same in the di next three years. Due to foreign currency’s higher Na nominal interest rate, subsidiaries will invest 20 per cent, 56 per cent and 44 per cent of their year-two earnings in China, India and Malaysia, respectively, for next year. Subsidiaries will remit their remaining incomes (i.e., after investment) to the Australian parent. Perth International believes in the Purchasing Power Parity with considering a 2.01 per cent real interest in Australia, China, India and Malaysia to calculate the expected foreign currency value against the Australian dollar for year-two based on the year-one exchange rates A$/CNY, A$/INR, and A$/MYR.

Assessment Task:

What is the total Australian dollar (A$) cash flow for year-two? (Enter the whole number with no sign or symbol).

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