Homeweb uk is a subsidiary of homeweb usa what is the free


HomeWeb UK is a subsidiary of HomeWeb USA. The company manufactures home security system. HomeWeb UK has forecasted the sales and cost figures for the next three years. They are as follows: Sales Volume = 100,000 units Sales Price = £100 per unit Cost = £60 per unit UK Corporate tax rate = 25% Spot Exchange rate = $1.50/£ Forward rate = $1.25/£ Operating Expenses = 15 percent of Sales Revenue Depreciation = £500,000 Cost of Capital = 7 percent Investing rate (UK) = 3 percent Investing rate (US) = 2.5 percent. Suppose the exchange rate changes to $1.45/£. What is the free cash flow in dollars for the next three years? Question options: $3,000,000 $2,568,965.51 $2,068,965.51 $2,900,000.

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