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MNC Financial Projections and Valuations

The document outlines the expected exchange rates and free cash flows for a US-based multinational corporation (MNC) with subsidiaries in India, Bangladesh, and the UK over five years. It provides calculations for present values, total free cash flows, and the MNC's value today, along with currency exchange details. The analysis includes various financial metrics and expected cash flows expressed in US dollars and other currencies.

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Ellin Ahmed
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158 views7 pages

MNC Financial Projections and Valuations

The document outlines the expected exchange rates and free cash flows for a US-based multinational corporation (MNC) with subsidiaries in India, Bangladesh, and the UK over five years. It provides calculations for present values, total free cash flows, and the MNC's value today, along with currency exchange details. The analysis includes various financial metrics and expected cash flows expressed in US dollars and other currencies.

Uploaded by

Ellin Ahmed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

US base

Year 1
Expec
US dollar vs INR ₹50.00

US dollar vs BDT 80.00৳

Expected fr
India (in INR) ₹500.00
Bangladesh (in BDT) 900.00৳
USA in dollar $90.00

Weighted a

Expected free cash flow


India $10.00
Bangladesh $11.25
USA $90.00

Total free cash flows (in US dollar) $111.25

Present values in US dollar (@ 10% RRR) $101.14

MNC value today (sum of the present values) $1,045.29


US based MNC: Two subsidiaries

2 3 4 5

Year 2 Year 3 Year 4 Year 5


Expected Exchange rates
₹47.50 ₹45.13 ₹42.87 ₹40.73

84.00৳ 88.20৳ 92.61৳ 97.24৳

Expected free cash flows (in millions)


₹500.00 ₹500.00 ₹500.00 ₹5,000.00
900.00৳ 900.00৳ 900.00৳ 9,000.00৳
$90.00 $90.00 $90.00 $900.00

Weighted average cost of capital is 10%

free cash flows (in millions) expressed in US dollar


$10.53 $11.08 $11.66 $122.77
$10.71 $10.20 $9.72 $92.55
$90.00 $90.00 $90.00 $900.00

$111.24 $111.28 $111.38 $1,115.33

$91.93 $83.61 $76.08 $692.53

in US dollar
UK MNC Three Subs.

1 2 3
Thai £0.0220 £0.0242 £0.0266 app
Aus £0.5200 £0.5200 £0.5200 no change
NZ £0.4500 £0.4050 £0.3645 depp
UK £1.0000 £1.0000 £1.0000

Thai 1000 1000 5000 10% WACC


Aus 50 50 500
NZ 70 70 700
UK 500 500 3000

£22.0000 £24.2000 £133.1000


£26.0000 £26.0000 £260.0000
£31.5000 £28.3500 £255.1500
£500.0000 £500.0000 £3,000.0000

£579.5000 £578.5500 £3,648.2500


PVs £526.82 £478.14 £2,740.98

value £3,745.94
€ 100,000 € 99,952 € 48
bid ask
Euro $ 1.0415 $ 1.0420 0
USD € 0.9597 € 0.9602
$ 104,150 $ 104,200

Euro $ 1.0915 $ 1.0920 1

$ 200,000 € 191,939 € 192,031


$ 200,000 € 191,939 € 192,031

£ 150,000 USD

GBP $ 1.2332 $ 1.2339 Direct


USD £ 0.8104 £ 0.8109 Indirect

$ 184,980
$ 184,980
Direct: value of the foreign curr. i.t. of the home curr. usa is home Euro
indrect: value of the home curr. i.t. of the foreign curr.

customer gets the inferior deal


€ 100,000 € 99,933 € 67
€ 99,933
Bid Ask
EURO 1.00 $ 1.0432 $ 1.0439 DIRECT USA home
USD 1.00 € 0.9579 € 0.9586 INDIRECT
$ 104,320 $ 104,390

$ 104,320

£ 99,943
£ 100,000 £ 99,943 USA home
BID ASK
GBP $ 1.2345 $ 1.2352 DIRECT
USD £ 0.8096 £ 0.8100 INDIRECT

$ 123,450
$ 123,450
€ 100,000 € 99,952 € 99,952

bid ask USA HOME


Euro $ 1.0415 $ 1.0420 DIRECT
USD € 0.9597 € 0.9602

$ 104,150 $ 104,200

$ 104,150

£ 99,960
GBP £ 100,000 £ 99,960 USA HOME

GBP $ 1.2360 $ 1.2365 DIRECT


£ 0.8087 £ 0.8091 INDIRECT

$ 123,600
$ 123,600

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