Assume that Live Co. has expected cash flows of $200,000 from domestic operation

Question

Assume that Live Co. has expected cash flows of $200,000 from domestic operations, SF200,000 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 $.83 and $1.29 respectively, at the end this year. What are
the expected dollar cash flows of Live Co?

Explanation / Answer

1) Dollar cash flow = $ 200000 2) SF cash flow = SF 200000 => in Dollars = SF 200000*0.83 $/SF= 166000 ($) 3) Euro cash flow = Euro 150000 => In dollr terms = Euro 150000 * 1.29 $/Euro = 193500 ($) Total Dollar cash flow = (1) +(2) +(3) => = 200000 + 166000 + 193500 => = 559500 ($) (ANSWER)

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