Clover Machines Case Summary
CASE STUDY
Question
1. This project seems reasonable to Clover Machines because the growth of eastern economies including Russia may increase the demand for machinery.A high demand may boost up the sales by Clover Machines and achieve higher sales growth. It’s also expected that the growth rate for farm equipment in Europe may at least to double the rate of productivity, which is pegged at 4%
Besides that, the penetration of market by others competitors is low and hence it may decrease the threat by competitor in term of price competiton.
2.
Year Term structure Term Structure Exchange rate Column1 USD CZK USD CZK CZK USD
Year
0 25.0000 0.0400
1 2.50% 4.50% 25.4878 0.0392
2 3.00% 5.20% 26.0322 0.0384
3 3.10% 6.00% 26.7644 0.0374 …show more content…
Based on IRP, if foreign interest rate is higher than domestic interest rate, than the corresponding foreign currency forward rate will be less than the spot rate. The limitation of this theory is when the default risk varies, the interest rate levels in various countries may reflect not only the forward premium but also differential levels of default risk. …show more content…
Question 4
Based on the sensivity analysis, the break even points for market share is 12 % and list price is CZK 2752152.38 (Based On GOAL SEEK FUNCTION IN
Question
1. This project seems reasonable to Clover Machines because the growth of eastern economies including Russia may increase the demand for machinery.A high demand may boost up the sales by Clover Machines and achieve higher sales growth. It’s also expected that the growth rate for farm equipment in Europe may at least to double the rate of productivity, which is pegged at 4%
Besides that, the penetration of market by others competitors is low and hence it may decrease the threat by competitor in term of price competiton.
2.
Year Term structure Term Structure Exchange rate Column1 USD CZK USD CZK CZK USD
Year
0 25.0000 0.0400
1 2.50% 4.50% 25.4878 0.0392
2 3.00% 5.20% 26.0322 0.0384
3 3.10% 6.00% 26.7644 0.0374 …show more content…
Based on IRP, if foreign interest rate is higher than domestic interest rate, than the corresponding foreign currency forward rate will be less than the spot rate. The limitation of this theory is when the default risk varies, the interest rate levels in various countries may reflect not only the forward premium but also differential levels of default risk. …show more content…
Question 4
Based on the sensivity analysis, the break even points for market share is 12 % and list price is CZK 2752152.38 (Based On GOAL SEEK FUNCTION IN