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R.J. Reynolds International Financing

Question # 00000953
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Due on: 09/12/2013
Posted On: 09/11/2013 02:26 PM

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R.J. Reynolds Please show your work for all three parts of question 7. should be able to see exactly how you calculated your results. Questions What was the total cost of Nabisco? How will RJR pay for the last 49%? What is the breakdown of how the first 51% has been financed? What portions are being refinanced? How much remains to be refinanced? Why does RJR prefer to use debt rather than equity? What are the concerns about issuing debt in the domestic market? What advantages might RJR have if it issues debt in the Euromarket? What is a Dual Currency Bond? Who might be interested in buying the one suggested for RJR and why? What would be the all-in cost of financing (The IRR) for each of the following: a. 5-year Eurodollar bond b. 5-year Euroyen bond hedged into dollars (involves converting yen to dollars at the forward exchange rates found in Exhibit 8) c. 5-year Dual Currency Bond hedged into dollars (involves converting yen to dollars at the forward exchange rates found in Exhibit 8) 8. What do you suggest that RJR do? Why?
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R.J. Reynolds International Financing

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Posted On: 09/11/2013 02:27 PM
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Preview: shown xxxxx Euroyen xxxxxxxxxxxxxx 25,000,000,000 00 xxxxxxx Year Cash xxxxx 0 xxxxxxxxxxxxxx xx 102,401,117 xx 1 1,593,750,000 xx -11,182,202 07 x 1,593,750,000 xx xxxxxxxxxxx 07 x 1,593,750,000 00 xxxxxxxxxxx 07 4 xxxxxxxxxxxxx 00 xxxxxxxxxxx xx 5 xxxxxxxxxxxxxx 00 -113,583,319 xx Alternative way xx PV xx xxx 1,593,750, xxx /1 071 xxxxxxxxxx 000 / xx 071)2 xxxxxxxxxxxxxx xxxxxxxxxxxxxxx / xx 071)5 which xxxxxxxxx to dollars xx the xxxx xxxxxx equal xxx present value xx dollar receipts xxxxxxxxxx at xx xx so xxx dollar payments xxx determined by xxxxxxx for xx xx yen xxxxx above) converted xxxx dollars at xxx spot xxxx xx 236 xx Payment / x 1092 Payment x (1 xxxxxx xxxxxxxx PV xx yen converted xxxx dollars) / xx 1092)5) xxxxxxxxxxxx xxxx states xxxx RJR receives xxxxxxxxxxxxxx / 236 xx 103,814,900 xx xxxxxx is xxxxxxxxx from the xxxxxx value in xxxx 0 xxxxx xxxxxx and xxxx 11,182,202 07 xxx 5 years xxx in xxxxxxxx xxxxxx the xxxxxxxxxxx 83 in xxxx 5 The xxxxxx cost xxxxx xx this xxxxxx is 10 xx (The case xxxxxx out xx xxxx 5 xxxx one way xx think about xxxx is xx xxx that xxxxxxxx to the xxx cost of x 769 xxx xxxxxxx bonds, xxx 7 1 xxxx RJR is xxxxxxxxx is xx xx higher, xx the dollar xxxx of 10 xx should xx xxxxxxx by xxx 33 bp xx give us xxx comparable xxxxxx xxxx of xxxxx to 10 xxx 3) Dual xxxxxxxx bonds xxxxx xxx the xxxxx that pay xxxxxxxx in one xxxxxxxx and xxx xxxx redeemable xxxx another currency xx was found xx the xxxxxxx xxxx higher xxxxxxx rates are xxxx for 1985 xxxx Motor xxxxxx xxxxxxxxxx dual xxxxxxxx bonds as xxxxxxxx to ten xxxx Japanese xxxx xxxxx and xxxxxxxx risk at xxxxxxxxxx There are xxxx Japanese xxxxxxxxxxxx xxxx were xxxxxxx to take xxx currency risk xx redemption xxx xxxxx binds xxxxx these institutions xx.....
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