CASE SOLUTION 4 :

WHALER PUBLISHING COMPANY

GROUP 2:
S A L A U A B D U L M A L I K O L A R I N O Y E

810115

NURUL HUDA BINTI YAHYA

810572

RAZLINA BINTI ROMLI

806340

ALIANA SHAZMA AMIR BINTI AMIR

813298

NUR DIYANA BINTI ZAMRO

812395

SUBMISSION DATE : 22 MARCH 2013

ANSWER TO QUESTION A:
By using the exchange rate data from the supplemental
case problem of Part 3: Exchange Rate Risk
Management, we calculated the:
i. Percentage change in each exchange rate of year 1
till year 16 in order to determine the
expected(forecasted) spot rate for year 1 till year
16.
ii. Revenues from all countries (Australia, Canada,
New Zealand and British Pound) by multiplying
the number of foreign currency units to be received
as in the data of the previous case above (as shown
in the Table 1).

ANSWER TO QUESTION A (continued): Table 1

Historical
Exchange

%change

Current spot

Australia
future

Expected amount Autralia Dollar

revenue

Historical
exchange

%change

Current
spot

Canada
future

Expected
amount

EXPF

Historical

%change

Current
spot

NEW ZEALAND
future

Expected
amount

EXPF

Year
Scenario

0.7671

38,000,000

0.9839

0.8625

35,000,000

1.0437

0.5985

33,000,000

Historical
Exchange
rate

% change

Current spot

BRITISH POUND
future

Expected amount

EXPF
Expected
total revenue

1.2571

2.0235

1.9382

34,000,000

1.0864

-0.1357887

0.7671

0.662936

38,000,000

25,191,586

0.9908

0.007013

0.8625

0.868549

35,000,000

30,399,202

0.95

-0.08978

0.5985

0.544769

33,000,000

17,977,364

1.7024

-0.15869

1.9382

1.630635869

34,000,000

55,441,620

129,009,772

1.1414

0.05062592

0.7671

0.805935

38,000,000

30,625,535

0.9137

-0.07782

0.8625

0.795384

35,000,000

27,838,432

1.0197

0.073368

0.5985

0.642411

33,000,000

21,199,563

1.906

0.119596

1.9382

2.170000705

34,000,000

73,780,024

153,443,555

1.1505

0.00797267

0.7671

0.773216

38,000,000

29,382,202

0.8432

-0.07716

0.8625

0.795951

35,000,000

27,858,269

1.0666

0.045994

0.5985

0.626027

33,000,000

20,658,903

2.0345

0.067419

1.9382

2.068870881

34,000,000

70,341,610

148,240,983

1.1055

-0.0391134

0.7671

0.737096

38,000,000

28,009,651

0.8561

0.015299

0.8625

0.875695

35,000,000

30,649,334

0.9862

-0.07538

0.5985

0.553385

33,000,000

18,261,713

2.224

0.093143

1.9382

2.118730302

34,000,000

72,036,830

148,957,529

1.1807

0.06802352

0.7671

0.819281

38,000,000

31,132,672

0.837

-0.02231

0.8625

0.843257

35,000,000

29,514,002

0.9632

-0.02332

0.5985

0.584542

33,000,000

19,289,882

2.385

0.072392

1.9382

2.078510342

34,000,000

70,669,352

150,605,908

1.1279

-0.0447192

0.7671

0.732796

38,000,000

27,846,243

0.8432

0.007407

0.8625

0.868889

35,000,000

30,411,111

0.8244

-0.1441

0.5985

0.512254

33,000,000

16,904,394

1.908

-0.2

1.9382

1.55056

34,000,000

52,719,040

127,880,788

0.9806

-0.1305967

0.7671

0.666919

38,000,000

25,342,933

0.8137

-0.03499

0.8625

0.832325

35,000,000

29,131,367

0.7325

-0.11148

0.5985

0.531782

33,000,000

17,548,813

1.6145

-0.15383

1.9382

1.640054455

34,000,000

55,761,851

127,784,964

0.902

-0.080155

0.7671

0.705613

38,000,000

26,813,298

0.8038

-0.01217

0.8625

0.852006

35,000,000

29,820,219

0.6546

-0.10635

0.5985

0.534851

33,000,000

17,650,071

1.4506

-0.10152

1.9382

1.741438786

34,000,000

59,208,919

133,492,507

0.8278

-0.0822616

0.7671

0.703997

38,000,000

26,751,890

0.757

-0.05822

0.8625

0.812282

35,000,000

28,429,880

0.4776

-0.27039

0.5985

0.436669

33,000,000

14,410,081

1.1565

-0.20274

1.9382

1.545242176

34,000,000

52,538,234

122,130,084

10

0.6809

-0.1774583

0.7671

0.630972

38,000,000

23,976,925

0.7153

-0.05509

0.8625

0.814988

35,000,000

28,524,595

0.4985

0.04376

0.5985

0.624691

33,000,000

20,614,791

1.4445

0.249027

1.9382

2.420864591

34,000,000

82,309,396

155,425,708

11

0.6648

-0.0236452

0.7671

0.748962

38,000,000

28,460,548

0.7241

0.012303

0.8625

0.873111

35,000,000

30,558,883

0.5235

0.05015

0.5985

0.628515

33,000,000

20,740,996

1.4745

0.020768

1.9382

1.978453375

34,000,000

67,267,415

147,027,842

12

0.7225

0.08679302

0.7671

0.833679

38,000,000

31,679,799

0.813

0.122773

0.8625

0.968392

35,000,000

33,893,713

0.6575

0.255969

0.5985

0.751698

33,000,000

24,806,024

1.8715

0.269244

1.9382

2.460048355

34,000,000

83,641,644

174,021,181

13

0.8555

0.18408304

0.7671

0.90831

38,000,000

34,515,784

0.8382

0.030996

0.8625

0.889234

35,000,000

31,123,201

0.6283

-0.04441

0.5985

0.57192

33,000,000

18,873,368

1.8095

-0.03313

1.9382

1.873990329

34,000,000

63,715,671

148,228,024

14

0.7831

-0.0846289

0.7671

0.702181

38,000,000

26,682,885

0.8518

0.016225

0.8625

0.876494

35,000,000

30,677,300

0.5876

-0.06478

0.5985

0.55973

33,000,000

18,471,103

1.5772

-0.12838

1.9382

1.689377751

34,000,000

57,438,844

133,270,131

15

0.7671

-0.0204316

0.7671

0.751427

38,000,000

28,554,222

0.8625

0.012562

0.8625

0.873334

35,000,000

30,566,704

0.5985

0.01855

0.5985

0.609602

33,000,000

20,116,872

1.9382

0.228887

1.9382

2.381828075

34,000,000

80,982,155

160,219,954

ANSWER TO QUESTION A (continued): Table 2

AUSTRALIA

CANADA

NEW ZEALAND

BRITISH POUND

TOTAL ALL
COUNTRIES

2,794,712.88

1,539,133.49

2,377,260.15

10,807,872.11

14,512,605.99

28,331,078.25

29,959,747.56

19,168,262.56

66,523,506.91

143,982,595.28

68% Confidence
Interval

742,778.93

409,070.97

631,828.32

2,872,516.78

3,857,161.13

27,588,299.32
29,073,857.17

29,550,676.59
30,368,818.54

18,536,434.24
19,800,090.88

63,650,990.14
69,396,023.69

140,125,434.15
147,839,756.41

95%
Confidence Interval

1,414,293.87

778,894.70

1,203,037.52

5,469,437.43

7,344,257.00

26,916,784.38
29,745,372.11

29,180,852.86
30,738,642.26

17,965,225.04
20,371,300.08

61,054,069.48
71,992,944.35

136,638,338.28
151,326,852.29

standard
deviation
min

1. The standard deviation of the US

Dollars revenues from all countries in aggregate is $14,512,605.99.
2. The 68 percent confidence level is from $140,125,434.15 to $147,839,756.41
3. The 95 percent confidence level if from $136,638,338.28 to $151,326,852.29

ANSWER TO QUESTION B:
A$

C$

NZ$

A$

1.00

C$

.35

1.00

NZ$

.41

.39

1.00

Pound

.30

.17

.82

Pound

1.00

From the table above (the correlation coefficient matrix), shows some positive
correlation among all the countries.
From the table above, it shows that the aggregate dollar cash inflows of Whaler is
more uncertain than if exchange rate movements were completely independent.
If one currency declines in value, the other currencies would probably decline as
well.

ANSWER TO QUESTION C:
The executive approach is perhaps slightly easier to use
however it may be less reliable.

In the case of Whaler, they does not use the past

exchange rate data to stimulate those actual exchange
rates but to stimulate the annual percentage changes in
the exchange rates.

ANSWER TO QUESTION D:
Referring to the table 2 (slide 4), is the calculation for items below:
AUSTRALIA

CANADA

NEW ZEALAND

BRITISH POUND

TOTAL ALL
COUNTRIES

standard
deviation

2,794,712.88

1,539,133.49

2,377,260.15

10,807,872.11

14,512,605.99

min

28,331,078.25

29,959,747.56

19,168,262.56

66,523,506.91

143,982,595.28

68% Confidence
Interval

742,778.93

409,070.97

631,828.32

2,872,516.78

3,857,161.13

27,588,299.32

29,550,676.59

18,536,434.24

63,650,990.14

140,125,434.15

29,073,857.17

30,368,818.54

19,800,090.88

69,396,023.69

147,839,756.41

95%
Confidence Interval

1,414,293.87

778,894.70

1,203,037.52

5,469,437.43

7,344,257.00

26,916,784.38

29,180,852.86

17,965,225.04

61,054,069.48

136,638,338.28

29,745,372.11

30,738,642.26

20,371,300.08

71,992,944.35

151,326,852.29

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CASE SOLUTION