Groupe Ariel S.A.: Parity Conditions and Cross-Border Valuation (Brief Case). Groupe Ariel. BZ. Beth Zimmerman. Updated 18 Parity Conditions and Cross- Border Valuation. Groupe Ariel S.A.. About Groupe Ariel. How should Groupe Ariel finance the project? In pesos Will this affect your conclusions on whether Groupe Ariel should approve the project?.

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Click here to sign up. Product details Share this page: Please find below the full details of the product you clicked a link to view. Compare the two sets of calculations and the corresponding NPVs. The Case Centre is a not-for-profit company limited by guarantee, registered in England No and entered in the Register of Charities No Total peso cash flows TN exhibit 5: When parity conditions hold, approaches 1 and 2 give the same Euro NPV.

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Try different assumptions regarding inflation rates. This generates a loss of 75, pesos.

Help Center Find new research papers in: The improvements will allow the plant to automate recycling and remanufacturing of toner and printer cartridges, an important part of Ariel’s business in many markets. Ariel requires a DCF analysis and an estimate of NPV for capital expenditures of this size in its newer foreign subsidiaries.

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Groupe Ariel SA: Parity Conditions and Cross-border Valuation | The Case Centre, for educators

The modifications to its capital budgeting procedures are partly intended to support the company’s efforts to continue this success. After-tax cost savings are affected TN exhibit 4.


When parity does not hold, the two approaches can give very different answers and may even cause managers at headquarters and in the subsidiary to disagree about whether the project should be undertaken. By continuing to use our site you consent to the use of cookies as described in our privacy policy unless you have disabled them.

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Business and Environment Business History Entrepreneurship. Groupe Ariel evaluates a proposal from its Mexican subsidiary to purchase and install cost-saving equipment at a manufacturing facility in Monterrey.

A case study Groupe Ariel S.A.: Parity conditions and cross-border valuation.

The row of future exchange rates shows no change in currency values because inflation is the same in both countries. Explore the relevance and influence of assumptions regarding parity conditions.

There is no unique correct solution. If PPP holds, If purchasing power parity is expected to hold, then the best prediction for the one-period spot valuayion should be. My account New to The Case Centre? How should Martin incorporate such an expectation into his NPV analysis? What is your result in part 1 if you assume parity conditions to hold?

Published by Berniece Grant Modified over 2 years ago. Registration Forgot your password? The old equipment is sold in year 0 forpesos, but the book value ispesos. Parity conditions and cross-border valuation.

Should Groupe Ariel approve the equipment purchase? Access this item You must be logged in to view this material. There are three issues of senior unsecured notes, one floating rate note, one equity offering, and one convertible note. Teaching note supplement software. Ariel corporate policy requires a discounted cash flow DCF analysis and an estimate for the net present value NPV for capital expenditures in foreign conditikns. Include hedging and financing considerations into your discussion and recommendation.

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Stryker has compiled a remarkable track record of consistently high growth in profitability over more than 20 years. Luehrman and David Lane This case consists primarily of excerpts from term sheets and prospectuses for six securities offerings made by US companies duringjust after the financial crisis and recession of Feedback Privacy Policy Feedback. Remember me on this computer. Timothy A Luehrman ; James Quinn. The actual 1-year and 2-year forward rates at the date of the case were MXN Discount peso cash flows at a Peso discount cross-bofder and convert the NPV.

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Share buttons are a conditiohs bit lower. Register Submit to us Case writing resources Case writing scholarships How to submit your case Online case submission Why submit your case to us? What if you apply alternative assumptions not consistent with parity? Cite View Details Purchase Related. Technology and Operations Management. What is its effect on the concluded NPVs? Teaching Note HBS Case Collection January Revised October Tombstones This case consists primarily of excerpts from term sheets and prospectuses for six securities offerings made by US companies duringjust after the financial crisis and recession of Tax ID No