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International Finance Management Question

(b) Kenduri Co is considering whether or not to manage the foreign exchange exposure by using multilateral netting from the UK, with the Sterling Pound () as the base currency. Multilateral netting is undertaken in order to show the cash flow transaction. The following cash flows between Kenduri with three subsidiaries; Lakama from United States, Jaia from Canada and Gochiso in Japan. Below are the details of cash flow transactions: Owed by Kenduri Kenduri Kenduri Gochiso Gochiso Gochiso Jaia Jaia Jaia Lakama Lakama Lakama Owed to Lakama Jaia Gochiso Jaia Lakama Kenduri Lakama Kenduri Gochiso Gochiso Kenduri Jaia Amount US$ 4.5 million CAD 1.1 million JPY180 million CAD 3.2 million US$ 1.4 million GBP 25 million US$ 1.5 million GBP 40 million JPY 115 million JPY 320 million GBP 2.1 million CAD 2.5 million Calculate the impact of undertaking multilateral netting by Kenduri Co and its three subsidiary companies for the cash flows due in three months if the exchange rate is $1.5938/, CAD1.5690/ and JPY131.91/ (b) Kenduri Co is considering whether or not to manage the foreign exchange exposure by using multilateral netting from the UK, with the Sterling Pound () as the base currency. Multilateral netting is undertaken in order to show the cash flow transaction. The following cash flows between Kenduri with three subsidiaries; Lakama from United States, Jaia from Canada and Gochiso in Japan. Below are the details of cash flow transactions: Owed by Kenduri Kenduri Kenduri Gochiso Gochiso Gochiso Jaia Jaia Jaia Lakama Lakama Lakama Owed to Lakama Jaia Gochiso Jaia Lakama Kenduri Lakama Kenduri Gochiso Gochiso Kenduri Jaia Amount US$ 4.5 million CAD 1.1 million JPY180 million CAD 3.2 million US$ 1.4 million GBP 25 million US$ 1.5 million GBP 40 million JPY 115 million JPY 320 million GBP 2.1 million CAD 2.5 million Calculate the impact of undertaking multilateral netting by Kenduri Co and its three subsidiary companies for the cash flows due in three months if the exchange rate is $1.5938/, CAD1.5690/ and JPY131.91/

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