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helpMuslim women who are always on the go$.$ The company designs, manufactures, wholesales, and

retails exclusive and original ladies' fashion apparel and scarves under the BouQuetta brand

founded by a Lebanese woman based in the United States. It has few subsidiaries established

around the world. The company's stores are mostly located in the Gulf countries and Asian

countries, including Malaysia and Singapore. BouQeutta Co$.$ receives earnings from subsidiaries

every three months. The table below displays the supplementary information related to the spot

exchange rate and interest rate.

Later, BouQeutta Co$.$ sales are somewhat affected by the Malaysian Ringgit $($MYR$)$ value. The

growing inspired pin$-$free scarf industry with lower prices in Malaysia has lifted the Muslimah

customer preferences from the authentic BouQetta brand to the inspired one. The company

estimated the U$.$S$.$ sales based on the following three exchange rate scenarios and assembled the

following estimated information to evaluate its economic exposure:

Below is additional projected financial information gathered from the finance department

concerning the subsidiary in Malaysia and BouQuetta Co$.\text{'}$s expected cost.

Required:

Assume that BouQeutta $CO,$ has nef receivables of $200,000$ Singapore dollars in $90$ days.

Suggest how the BouQeutta Co$.$ could implement a money market hedge. Be precise. $(5$ marks$)$

Calculate the estimated net cash flows for BouQeutta Co$.$ under each of the three exchange

rate scenarios: $(9$ marks$)$

Clarify how BouQeutta Co$.$ can restructure its operations by maintaining the volume of

Malaysian business to lessen the sensitivity of its net cash flows to exchange rate movements. $(2$

marks$)$

Besides its businesses in the said countries, BouQuetta has an enormous contract with the

Lebanon government. The contract will continte for quite a few years and generate more than

half of BouQuetta's total sales volume. The Lebanon government pays BouQuetta in Lebanese

pounds. Roughly $15$ percent of BouQuetta's operating expenses are in Lebanese pounds, and

other expenses are in U$.$S$.$ dollars. Provide suggestions on how BouQuetta Co$.$ can reduce its

economic exposure to exchange rate fluctuations.

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