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Finance & Accounting
Pages 12 (3012 words)
DeCISIONS IN USA SUPERCARS (Author’s name) (Institutional Affiliation) Key words: Super Cars, Exchange rates Executive Summary The paper analyses the risks in foreign currency that USASupercars face in their daily operation. This is achieved by examining the contract that is aimed in selling in one year from now.
The uncertainty of a given amount of revenue that may be gotten, after the perspective order in various currencies are converted to $ are computed. This provides estimation of the anticipated future revenue, to help the company in budgeting and planning processes. Consequently, the HSBC offer will be discussed to explore the disadvantages and advantages of handling the decision from the CEO and Sales manager point of view. Consequently, the paper discusses the Value at Risk of the bank, alternative options, and the historical performance of exchange rates. The conclusions from the paper will be helpful in directors and managers of USASuperCars to make proper decision in reference to the perspective future revenues, and proper ways to deal with the fluctuation in exchange rates. Introduction USASuperCars is a company that sells luxury sport cars. The company has signed a contract with seven clients around the globe to sell cars in a year’s time. The selling prices are always constant and are in domestic currency at the prevailing market’s selling price at the delivery time (Sarno & Taylor, 2002). One of the problems that the company faces is the uncertainty of the exchange rates, to cope with the uncertainty. The company has come up with standard deviation and estimates from the Bank of America to curb the uncertainty. ...
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