ifm mazharproviding of quality products to their customers fulfilling of social responsibility by...
TRANSCRIPT
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Multinational Capital Budgetingof Rastgar Pakistan
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LAYOUT
Introduction
Motives & Diversification
Benefits
Host Country's Views of DFI
Analysis of project with the help
of Multinational CapitalBudgeting Techniques.
Conclusion
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INTRODUCTION
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Company Profile
Rastgar Engineering Company
Pakistan Based
Exports in 23 countries
Three Types of Products
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Objectives of REC
Providing of Quality Products totheir customers
Fulfilling of Social Responsibility byCompany
Retaining of Highly skilledEmployees
Providing high returns to itsshareholders
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Types of Products
Wheel Hubs
Steering KnucklesBrackets
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Importance of REC in Pakistan
First Company to sign GlobalCompact
Manufacturing Quality products to
export in foreign countries
New Job opportunities
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Future Plans of REC
A new subsidiary in Germany
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Objectives of the Study
To suggest best timing of DFI
To suggest best FinancingArrangements
To suggest how to avail the
advantages of InternationalDiversification.
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MOTIVES &
DIVERSIFICATION
BENEFITS
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Cost Related Motives
Fully benefit from economies of scale.
Use of skilled personal from Germany
React to exchange rate movements.
Diversify sales/production internationally
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Revenue Related Motives
Attract new sources of demand
React to trade restrictions
Benefit of small distance from the
high export countries
Vehicles making countries are verynear
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Benefits of International Diversification
Low risk
Benefits of new economic opportunities
Availability of raw material
Low cost
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HOST COUNTRIES
VIEWS OF DFI
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Incentives to Encourage DFI
Cheap Labor
Competitive Tax SystemCorruption Free Environment
Labor related incentives
Infrastructure SubsidiesR&D Infrastructure
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Barriers to DFI
Industry Barriers
Environmental Policies
Blocked Funds
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ANALYSIS OF PROJECT WITH
THE HELP OFMULTINATIONAL CAPITAL
BUDGETING TECHNIQUES
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Inputs for Multinational
Capital Budgeting Initial Investment
Total Revenues per Year for the
Project Life i.e. 5 years.
Total Variable Cost per Year
Total Fixed Cost per Year
Project Lifetime
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Inputs for Multinational
Capital Budgeting Exchange Rates
Required Rate of Return
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NPVs of REC for the 5 Years
Cumulative NPV in German Euro
-766104107
650383842.5
528144126.3
402110405.3
95747080.79
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NPVs in case of Blocked Funds
Cumulative NPV in German Euro
-871980000
871980000
871980000
871980000
75718101.07
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NPVs in case of Strong Rupee
Cumulative NPV in German Euro
-766104107.1
650383842.5
528144126.3
402110405.3
95747080.79
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CAPITAL BUDGETING ANALYSIS IN CASE
OF WEAK RUPEE SCENARIO
Cumulative NPV in German Euro
-769755000
662015443.2
552421214.9
443771455.4
23493765971
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NPVs in case of Subsidiary
financing ArrangementCumulative NPV
-767053339
-652180603
-530697609
-405339533
9637805
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SENSITIVITY ANALYSIS
MOST LIKELY REVENUES
Cumulative NPV
-766104107
-650383842
-528144126
-402110405
95747081
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SENSITIVITY ANALYSIS
PESSIMISTIC REVENUES
Cumulative NPV in Dollars
-789834911
-688240124
-578612442
-463839466
23963783
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SENSITIVITY ANALYSISOptimistic
Cumulative NPV in Dollars
-750283571
-620437828
-485586078
-348291612
164647229
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Simulation Analysis
CAPITAL BUDGETING ANALYSIS IN CASE OF STRONGRUPEE SCENARIO
Cumulative NPV
-766104107
-650383842
-528144126
-402110405
95747080.8
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Simulation Analysis
CAPITAL BUDGETING ANALYSIS IN CASE OF WEAKRUPEE SCENARIO
Cumulative NPV
-769755000
-662015443
-552421215
-443771455
23493765971
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Simulation Analysis CAPITAL BUDGETING ANALYSIS IN CASE OF STABLE
RUPEE SCENARIO
-766104107
-650383842
-528144126
-402110405
28522413985
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Any Question.!!!
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TeachersComments
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