Navigation Systems Inc. now has total worldwide revenues of over $500 million

| October 3, 2018

Navigation Systems Inc. now has total worldwide revenues of over
$500 million forecast for this coming year. You have operations in the United
States of $300 million with a 10% ROS (return on sales, which is the same as
net income on an income statement); operations in Germany of €100 million with
an ROS of 12%; and operations in Shanghai, China of 650 million Yuan
with an ROS of 8%. You expect to repatriate all the ROS to the United States
when available in 12 months.
At your supervisor’s request, do the following:

Determine
the spot and 12-month forward exchange rates, and determine any change in
the ROS repatriated in 12 months based on exchange rates versus the
current forecast.
Describe
the repatriation using each of the following:

A spot transaction
An outright forward
A foreign-exchange swap

Would
there be any use or benefit in using a currency option or currency
swaption? Describe each.
Be
sure to consider any U.S. corporate taxes that may be due and also whether
there are any tax holidays in effect that may alter the taxes due on
repatriation of the profits.
How
would you advise the company to handle the repatriation?

Please
provide references and cite where used in the body. APA Format.

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