Example Problem (Chapter 1) Dollar value of MNC’s cash flows Example Problem (Chapter 1) Dollar value of MNC’s cash flows - 1 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 euro's value are expected to be $1.05 and $1.20 respectively, at the end of this year. What are the expected dollar cash flows of Live Co? $200,000 + SFr200,000 × $1.05/SFr + €150,000 × $1.20/€ = $590,000 Example Problem (Chapter 1) Dollar value of MNC’s cash flows - 2 Assume that Live Co. has expected cash flows of $200,000 from domestic operations, cash inflows of 300,000 Swiss francs due to exports to Swiss operations, and cash outflows of 100,000 Swiss francs at the end of the year. The Swiss franc's value is expected to be $.83 at the end this year. What are the expected dollar cash flows of Live Co? $200,000 + (SFr300,000 – SFr100,000) × $0.83/SFr = $366,000