For a recent month,the following payments matrix of interaffiliate cash flows was forecasted: $$\begin{array} { c | c c c }
& \ { \text { Disbursement From: } } \
\text { Receipts by: } & \text { France } & \text { Britain } & \text { U.S. } \
\hline \text { France } & - & € 500 & € 800 \
\text { Britain } & £ 300 & - & £ 400 \
\text { U.S. } & \$ 1,000 & \$ 500 & -
\end{array}$$ Use multilateral netting to find the net payment from the British affiliate to the U.S.affiliate. The spot exchange rates are $1.20 = €1.00 and $1.80 = £1.00; affiliates get paid in home currency.

Question

For a recent month,the following payments matrix of interaffiliate cash flows was forecasted: $$\begin{array} { c | c c c } 
& \ { \text { Disbursement From: } } \
\text { Receipts by: } & \text { France } & \text { Britain } & \text { U.S. } \
\hline \text { France } & - & € 500 & € 800 \
\text { Britain } & £ 300 & - & £ 400 \
\text { U.S. } & \$ 1,000 & \$ 500 & -
\end{array}$$ Use multilateral netting to find the net payment from the British affiliate to the U.S.affiliate. The spot exchange rates are $1.20 = €1.00 and $1.80 = £1.00; affiliates get paid in home currency.

Quizplus · Accepted Answer

The net payment from the British affiliate to the U.S. affiliate is $60. This is calculated by first converting the payments from the British affiliate to the U.S. affiliate into U.S. dollars, using the spot exchange rate of $1.80 = £1.00. This gives us a total of $720 (300 * 1.80 + 400 * 1.80). We then subtract the payments from the U.S. affiliate to the British affiliate, which is $500. This gives us a net payment of $220. We then convert this amount into euros, using the spot exchange rate of $1.20 = €1.00. This gives us a net payment of €183.33 (220 * 1.20).

For a Recent Month,the Following Payments Matrix of Interaffiliate Cash