Question

Assume that Live Co. has expected cash flows of $200,000 from domestic operations, 200,000 Swiss francs from Swiss operations, and 150,000 euros from Italian operations at the end of the year. The Swiss franc's value and the euro's value are expected to be $.83 and $1.29, respectively, at the end of this year.
1. What are the expected dollar cash flows of Live Co?

Answer 1

Answer:

$559,500

Explanation:

To find Live Co.'s expected dollar cash flows at the end of this year convert the Euro and Swiss francs amounts to dollar using their respective rates and then add all of the dollar amounts.

Swiss francs in dollars:

$S = 200,000*0.83 = \ 166,000$

Euros is dollars:

$E = 150,000*1.29 = \ 193,500$

Dollar cash flow:

$C=D+S+E\\C = \ 200,000+\ 166,000 +\ 193,500\\C=\ 559,500$

The company's expected dollar cash flows are $559,500.