Florida National University Corporate Finance Course Case Study

I don’t know how to handle this Business question and need guidance.

Hi there!

I need some help with my research paper based on a case study for my corporate finance class.

Instructions:

Chapter 18. International Aspects of Financial Management

After you have reviewed Chapter 18, go to the end of the chapter and read the case on page 611 – S&S Air Goes International

Carefully work through the analysis of the company’s decision by answering the questions at the end of the case. And prepare a report to management. State your recommendations and explain clearly why you are making each recommendation.

All submissions must be in proper APA format. Do not include the questions in your paper, however, you need to address them all in essay format. You must include cover, abstract and references. The paper will be checked for plagiarism before grading.

Case study:

Mark Sexton and Todd Story, the owners of S&S Air, have been in discussions with an aircraft dealer in Europe about selling the company’s Eagle airplane. The Eagle sells for $98,000 and has a variable cost of $81,000 per airplane. Amalie Diefenbaker, the dealer, wants to add the Eagle to her current retail line. Amalie has told Mark and Todd that she feels she will be able to sell 15 airplanes per month in Europe. All sales will be made in euros, and Amalie will pay the company €75,384 for each plane. Amalie proposes that she order 15 aircraft today for the first month’s sales. She will pay for all 15 aircraft in 90 days. This order and payment schedule will continue each month.

Mark and Todd are confident they can handle the extra volume with their existing facilities, but they are unsure about the potential financial risks of selling their aircraft in Europe. In their discussion with Amalie, they found out that the current exchange rate is $1.30/€. This means that they can convert the €75,384 per airplane paid by Amalie to $98,000. Thus, the profit on the international sales is the same as the profit on dollar denominated sales. Mark and Todd decided to ask Chris Guthrie, their financial analyst, to prepare an analysis of the proposed international sales. Specifically, they ask Chris to answer the following questions.

1. What are the pros and cons of the international sales? What additional risks will the company face?

2. What happens to the company’s profits if the dollar strengthens? What if the dollar weakens?

3. Ignoring taxes, what are S&S Air’s projected gains or losses from this proposed arrangement at the current exchange rate of $1.30/€? What happens to profits if the exchange rate changes to $1.37/€? At what exchange rate will the company break even?

4. How could the company hedge its exchange rate risk? What are the implications of this approach?

5. Taking all factors into account, should the company pursue the international sales deal further? Why or why not?

Attached is the chapter 18 in PDF for reference.

Due date is on 10/13/2020

Thank You!

superadmin (28431)
New York University
15 MILLION STUDENTS HELPED!

Sign up to view the full answer

View Answer

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
Have a homework question? Get help from verified tutors now!

Are you looking for Assignment Help save 10% with this code GEEKS10