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 the euro's value are expected to be $.83 and $1.29, respectively, at the end of this year. What are the expected dollar cash flows of Live Co?
A) $200,000
B) $559,500
C) $582,500
D) $393,500

Question

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 the euro's value are expected to be $.83 and $1.29, respectively, at the end of this year. What are the expected dollar cash flows of Live Co?​
A) ​$200,000
B) ​$559,500
C) ​$582,500
D) ​$393,500

Quizplus · Accepted Answer

To calculate the expected dollar cash flows of Live Co., convert the foreign currencies to USD using the given exchange rates and add them to the domestic cash flows. For Swiss francs: 200,000 * $0.83 = $166,000. For euros: 150,000 * $1.29 = $193,500. Adding these to the domestic cash flows: $200,000 + $166,000 + $193,500 = $559,500.

Assume That Live Co