Finance Answers

FDI Strategy. Rip Curl, an Australian designer, manufacturer and retailer of surfing sportswear has decided to establish a subsidiary in Brazil that will manufacture and sell their products there. It expects that its cost of producing their products will be one-third the cost of producing them in Australia. Assuming that its production cost estimates are accurate, is Rip Curl’s strategy sensible? Explain.

Opportunities in Less Developed Countries. Offer your opinion on why economies of some less developed countries with strict restrictions on international trade and FDI are somewhat independent from economies of other countries. Why would MNCs desire to enter such countries? If these countries relaxed their restrictions, would their economies continue to be independent of other economies? Explain.

Capitalising on Low-Cost Labour. Some MNCs establish a manufacturing facility where there is a relatively low cost of labour, but they sometimes close the facility later because the cost advantage dissipates. Why do you think the relative cost advantage of these countries is reduced over time? (Ignore possible exchange rate effects.)

FDI Restrictions in Selected Industries Some countries restrict foreign ownership in selected industries such as banking, media and telecommunications.
a. If Australia introduced fresh restrictions on foreign ownership in the real estate sector how would this affect Australian real estate companies? Australian home owners? Renters?
b. If Australia removed previously existing restrictions on foreign ownership in the banking sector, how would this event affect Australian-owned banks? Bank customers? Shareholders of Australian banks?

Motives for FDI Some MNCs from developed countries are keen to enter dynamic emerging markets such as China. On the other hand, several Chinese companies have set up subsidiaries in developed countries such as Germany. How are the motivations of the Chinese companies different from developed country MNCs?

Impact of a Weak Currency on Feasibility of FDI. Fisher and Paykel Appliances, a New Zealand manufacturer of white goods, plans to establish a subsidiary in Indonesia in order to penetrate the Indonesian market. Their executives believe that the Indonesian Rupiah’s value is relatively strong and will weaken against the New Zealand dollar over time. If their expectations about the rupiah’s value are correct, how will this affect the feasibility of the project? Explain.

Describe the process of collating, coding, and classifying data in preparation for processing.

What accounting standard is relevant to the presentation of financial statements including budgets?

laundry processed 120 kg & is expected to grow to 132 kg. This growth will continue at the same percentage rate for next 7years . Currently hospital , is considering two options, the purchase of machine A or the rental of machine B. given information: Machine A – purchase Annual capacity £180 Material cost per kilogram £2 Labour cost per kilogram £3 Fixed costs per annum £20 Life of machine 3 years Capital cost £60 Depreciation per annum £20 Machine B – rent Annual capacity (kilograms) £170 Material cost per kilogram £1.8 Labour cost per kilogram £3.4 Fixed costs per annum £18 Rental per annum £20 Rental agreement 3 years Depreciation per annum nil 1. The hospital is able to call on an outside laundry if there is either a breakdown. The charge would be £10 per kilogram of washing. 3. Machine A will have no residual value at any time. 4. Present machine can be sold £10 cash 6. discount rate is 15%. (a) evaluate the two options for operating the laundry, using discounted cash flow techniques;

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