AC4201 :Web Login - Dominique is a Multinational Group - Management Assignment Help

Assignment Task:

Task:

Web Login 
AC4201 A.ignement2 
Dominique is a multinational group. The head office and parent entity are based in country "D" which uses currency DS. The group runs a chain of supermarkets both in country D and in neighbouring count... Dominique sources its supplies from its home country D, neighbouring counthes and also from some more distant countries. 
Dominique is thnded by a m. of equity and long-term borrowings. 
Propos. new project 
The proposed new project is to open a number of new superman.. in country T, a neighbouring country, which uses currency TS. Market research has already been undertaken at a cost of DS 0.3 million. If the puthosed projea is approved additional logistics planning will be commissioned at a cost of DS 0.38 million payable at the start of 20X0. 
°dyer forecast project cash flows: 
Initial investment on I January 20X0 R.idual value at the end of 20X4 Net operating c.h infirm's: 
TS million 1. TS million 40 
20X0 TS million . 20X1 and 20X2 growing at 20% a year from 20X0 levels 20X3 and 20X4 gnawing at 6% a year from 20X2 levels 
Additional information: 
On 1 January 20X0, the spot rate for converting DS to TS is expected to be DS1 = Ts 2.1145. Dominique h. received two conflicting exchange rate forecasts for the DS/TS during the life of the project as follows: 
Forecast A A stable exchange rate of DS1= TS2.1145 
Forecast B A devaluation of the TS against the DS of 5.496 a year Busine. tax is 20% in Country T, payable in the year in which it is incurred. Tax depreciation allowanc. are available in Country T at 20% a year on a reducing balance basis. All net cash Flows in Country T are to be remitted to Country D at the end of each year An additional 5% tax is payable in Country D based on remitted net cash flows net of DS cos. but no tax is payable or refundable on the initial investment and residual value capital flows. The project is to be evaluated, in DS , at a thscount re of 12% over a five year period. 
Required: 
 

evaluated, in DS , at a discount rate of 12% over a five year period. 2 of 2 
Required: 
(a) Calculate the initial investment for the new project. 
(5 marks) 
(b) Calculate the DS NPV of the project cash flows as at 1 January 20X0 using each of the two different exchange rate scenarios, Forecast A and Forecast B. 
(40 marks) 
(c) Calculate and discuss the MIRK of the project as at 1 January 20X0 using each of the two different exchange rate scenarios, Forecast A and Forecast B. (30 Marks) (d) Calculate the Pay Back Period for the project at 1 January 20X0 using each of the two different exchange rate scenarios, Forecast A and Forecast B. (10 marks) 
(e) Discuss the likely impact of changes in exchange rates and tax rates on the performance of the Dominique group as a whole and how this is likely to influence the financial strategy of the group. No further calculations are required. (10 marks) 
(f) Briefly advise Dominique whether or not it should proceed with the project (maximum 250 words). 
(5 marks) 
Submission date: 10/12/2020 23:59 pm 
Please refer to the academic regulations for penalties which apply to the late submission of coursework. 
 

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