Walt Disney Yen Financing Essay Example For Students

Walt Disney Yen Financing Essay 1. Should Disney hedge its yen royalty cash flow? Why or why not? If so, how much should be hedged and over what time period? Yes, Walt Disney Company should hedge its royalty cash flow to protect against currency fluctuations. The company has revenues in Yen and does not have expenses in Yen. Thus it would be converting the Yen to Dollar and so is exposed to foreign exchange risk. The value of Yen has declined recently and it is difficult to forecast what the value could be in the future. Also currency speculation should be left to speculators and Disney should not play on the exchange rate. It would be wise to reduce the risk due to changes in exchange rate. The royalty receipts form a significant part of the pre tax income of Disney and any adverse movement would impact the financial position of Disney. The maximum amount and the period should be the Yen royalties that accrue to Disney. At the moment the amount is Yen 8 billion. The royalties are expected to grow for all times in the future and so the hedging should be for the maximum maturity available which is 10 years. We will write a custom essay on Walt Disney Yen Financing specifically for you for only $16.38 $13.9/page Order now At the minimum, Disney may Disney may want to take enough money so as to reduce the debt to capitalization ratio back to 20% which now stands at 32%. The expected yen revenue stream of more than ? 8 billion every year would create 2. Assuming a hedge is desirable what hedging techniques available to the treasurer? What are the advantages and disadvantages of each? The various hedging techniques available and the advantages and disadvantages are : 1. Currency Options – In this Disney could buy dollar yen options allowing Disney the right to buy dollars against yen at a predetermine rate or could sell Put options allowing Disney to sell yen for dollars at a predetermined rate. The advantages of options are †¢ It gives the right but not the obligation. If the Option is out of the money it need not be exercised. †¢ Options have an unlimited upside but limited downside so will help Disney benefit from favorable rate movement. †¢ Options can be taken for high amounts using small margin money The disadvantages are †¢ The time period for which options are available is till 2 years only. Beyond 2 years the market is not liquid †¢ Options require payment of upfront premium and so there will be a cash outflow 2. Forward Contracts – In this Disney could take a forward contract through a bank and sell the Yen forward for US Dollars at a rate that is fixed now. The advantages are †¢ Forward contracts can be tailored to the needs and requirements of Disney †¢ Longer term contracts are available and Disney could hedge up to 10 years †¢ The forward contracts can be cancelled and so provide some flexibility in the future years The disadvantages are The rate is locked at the time of contract and so there is so upside benefit †¢ The forward contracts need to be honored at maturity and so Disney has to settle it †¢ As mentioned in the case, the forward contracts would be against the overall exposure to Disney and so would tie up lines of credit †¢ Forward contracts are exposed to default risks of the counterparty 3. Futures – Futu res are standardized contracts which are traded on the exchanges. That is the only difference between forward contracts and futures. Disney could buy or sell contracts on the futures exchange and hedge its exposure. .u4487911d3a3d81041ba6179125c97f84 , .u4487911d3a3d81041ba6179125c97f84 .postImageUrl , .u4487911d3a3d81041ba6179125c97f84 .centered-text-area { min-height: 80px; position: relative; } .u4487911d3a3d81041ba6179125c97f84 , .u4487911d3a3d81041ba6179125c97f84:hover , .u4487911d3a3d81041ba6179125c97f84:visited , .u4487911d3a3d81041ba6179125c97f84:active { border:0!important; } .u4487911d3a3d81041ba6179125c97f84 .clearfix:after { content: ""; display: table; clear: both; } .u4487911d3a3d81041ba6179125c97f84 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u4487911d3a3d81041ba6179125c97f84:active , .u4487911d3a3d81041ba6179125c97f84:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u4487911d3a3d81041ba6179125c97f84 .centered-text-area { width: 100%; position: relative ; } .u4487911d3a3d81041ba6179125c97f84 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u4487911d3a3d81041ba6179125c97f84 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u4487911d3a3d81041ba6179125c97f84 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u4487911d3a3d81041ba6179125c97f84:hover .ctaButton { background-color: #34495E!important; } .u4487911d3a3d81041ba6179125c97f84 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u4487911d3a3d81041ba6179125c97f84 .u4487911d3a3d81041ba6179125c97f84-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u4487911d3a3d81041ba6179125c97f84:after { content: ""; display: block; clear: both; } READ: Myth Or Science? EssayThe advantages are : †¢ They are liquid as they are traded on the exchange †¢ Using futures would not tie up the lines of credit with the banks †¢ There is not much default risk as the futures are market to market daily. The disadvantages are †¢ As these are standardized, they cannot be customized to the requirements †¢ Require a margin deposit †¢ The futures contracts are available for shorter periods only 4. Swaps – Disney could swap its exposure in Yen with Dollars so that its inflow is in Dollars and it pays Yen The advantages are †¢ Swaps are off balance sheet financing with only disclosure in notes. Thus the balance sheet looks better †¢ The two parties to Swap could customize the terms to their requirements †¢ Swap enables parties to access capital markets which they may not able to do directly The disadvantages are †¢ High fees to be paid to the intermediaries †¢ It is difficult to get counterparties with a perfect hedge 4. Yen 15 billion 10 year bullet loan The advantages are †¢ The time period would be 10 years †¢ The interest rate would be the Japanese prime rate The disadvantages are †¢ Since it is a bullet loan it does not help in hedging the year on year income †¢ Requires lump sum payment on maturity It is more expensive than the SWAP transaction †¢ Has upfront fees Other hedging methods such as issuing longer maturity Eurodollar note was not feasible because of the Disney’s temporarily high debt ratio. Also, Euroyen bonds are not an option because Disney was not eligible to issue them under Japanese regulations. 3. In light of the various other techniques for hedging currency exposures why the market for currency swap does exists? Who benefits and who looses in such an agreement? Can a swap really create value for a corporation? And if so where does the value come from? What risks does the swap carry for the various parties involved? The market for swap exists since it allows parties to access market which they might not be able to do directly. Also swaps are customizable between parties and so are more flexible. The duration of swaps could be the duration of the exposure. These advantages have led to the creation of the swap market. Swaps also help in broadening the investor base. Companies could raise money in different currencies and then use a swap to get back to their home currency. Swap also helps in lowering the overall cost of borrowing as also enable firms to change their payment stream to either fixed or floating. When the swap is initiated for the first time, it creates value since only if value is created will the parties agree for a swap. The value comes for the differing credit ratings of the firms. In interest rate swaps, two firms come together to swap their interest obligations and each mat find that it is paying a lower rate than before. The risks that the swaps carry is the changes in the market after the swap has taken place. In case of an fixed for floating swap, if the floating rate rise then the firm will have to pay more. Or in the case of currency swap, if the exchange rate movement is adverse, then there could be a loss. There is also a default risk since the agreement is between two parties. The swaps are not liquid and once entered may be difficult to come out of. 4. Evaluate Goldman’s proposal for an ECU bond issue accompanied by an ECU/yen swap. How does its â€Å"all-in† yen cost compare to that of the proposed yen term loan? Is it superior to hedging using outright forwards? (Note: â€Å"all-in† cost generally refers to that discount rate which equates the present discounted value of the future debt service payments with the financing proceeds less front-end fees , expressed as an annual rate). The calculations are in the excel file ( we use the IRR function to calculate the internal rate of return. The cash flow details are from the exhibits) . We get the following costs 1. 10 years ECU Eurobond Issue – YTM is 9. 46% 2. SWAP ECU/Yen – YTM is 6. 89% 3. Yen 10 year Loan – YTM is 7. 61% The ECU/Yen swap is the cheapest, though it does not include fees, bu t it may still be the cheapest. In the outright forwards market we find that the Yen is appreciating. .u57f1008682167b4f2b0f9ad585cb0c74 , .u57f1008682167b4f2b0f9ad585cb0c74 .postImageUrl , .u57f1008682167b4f2b0f9ad585cb0c74 .centered-text-area { min-height: 80px; position: relative; } .u57f1008682167b4f2b0f9ad585cb0c74 , .u57f1008682167b4f2b0f9ad585cb0c74:hover , .u57f1008682167b4f2b0f9ad585cb0c74:visited , .u57f1008682167b4f2b0f9ad585cb0c74:active { border:0!important; } .u57f1008682167b4f2b0f9ad585cb0c74 .clearfix:after { content: ""; display: table; clear: both; } .u57f1008682167b4f2b0f9ad585cb0c74 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u57f1008682167b4f2b0f9ad585cb0c74:active , .u57f1008682167b4f2b0f9ad585cb0c74:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u57f1008682167b4f2b0f9ad585cb0c74 .centered-text-area { width: 100%; position: relative ; } .u57f1008682167b4f2b0f9ad585cb0c74 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u57f1008682167b4f2b0f9ad585cb0c74 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u57f1008682167b4f2b0f9ad585cb0c74 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u57f1008682167b4f2b0f9ad585cb0c74:hover .ctaButton { background-color: #34495E!important; } .u57f1008682167b4f2b0f9ad585cb0c74 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u57f1008682167b4f2b0f9ad585cb0c74 .u57f1008682167b4f2b0f9ad585cb0c74-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u57f1008682167b4f2b0f9ad585cb0c74:after { content: ""; display: block; clear: both; } READ: Ten Year War Cuba EssayThis is obviously a better choice since this would mean that Disney would get more dollars. An exercise has been done, where the Yen payments made by Disney are converted to USD at the forward rates. Using the same discounting rate as the cost of Swap, the PV of the Yen payments in USD comes to $69. 27 million. This is higher than the present value of the amount that Disney gets from IBJ which is $58. 23 million. Also the Swap does not cover the entire exposure of Disney in Yen. Therefore if it is possible than outright forward hedge is better than other alternatives

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NGO helps to improve productivity by emphasis-sing work experience vocational, improvements in scientific and technological education and research and in many other wide areas. Public Private Partnership (PPP) on Higher Education in India What is PPP? Public-private partnership (PPP) describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies PPP involves a contract between a public-sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project. Need for PPPs The provision of schooling is largely provided and financed by governments. However, due to unmet  demand for education coupled with shrinking government budgets, the public sector is developing  innovative partnerships with the private sector. Increased private investment is thus imperative to expand infrastructure and provide greater access to quality higher education in India. EY FICCI report emphasizes that PPPs (Public Private Partnership) could be an effective mechanism for attracting much needed private sector investment in the Indian Higher education system without diluting the regulatory oversight of the Government and other regulators Common Misconceptions about PPPs Public private partnerships are the same as privatization By entering into a public private partnership, public sector loses control over the provision of  services Public private partnerships apply only to infrastructure projects The principal reason for government entering into public private partnerships is to avoid debt Public sector employee will lose under public private partnerships The cost of service will  increase to pay for the private partners profit There are only two partners in a public private partnership Few Figures Indias enrollment figures in higher education remain abysmally low at a mere 11 % compared to that of the US and Canada, where over 60 % of college-age students access higher education, highlighting that public-private partnerships are critical for wooing investment in Indias higher education system. This shortfall in the number of young who are eligible for higher education and the existing infrastructure presents Indias unique challenge, in terms of the sheer scale of its population. India has over 400 universities and more than 20,000 colleges with an enrollment of 14 million students, yet it is grossly inadequate. Partnership Formats in Education This study while covering the concept of public-private partnerships, presents the basic modes of  partnerships that can exist between the government and the private sector in the field of education. PPPs involve the government and private players to work hand-in-hand for providing public infrastructure and other services, while jointly sharing the risks, rewards, investments and responsibility associated with the activity. Partnerships are established for varied reasons including construction, financing, design and maintenance of public infrastructure. PPP in social sectors such as health and education are sometimes referred to as Public-Social Private  Partnership (PSPP). A number of PPP models can exist that range from simple management contracts to BOOT formats. These formats vary in the kind of benefits they yield, few of such formats are Public Private Financing of Higher Education Science / Research Parks   University owned companies Research Focus The research focus is on Public-Private financing of higher education. Let us see this through couple of cases as mentioned below The Melaka-Manipal Medical College PPP Manipal Academy of Higher Education (MAHE) India entered into an agreement with Joint Venture Medical  College Corporation (JVMC) Malaysia to start a private medical college in Malaysia. The key objective was to provide additional doctors for Malaysia and offer opportunities for students in the region to study medicine at a cheaper cost than in the West. The agreement led to partnership between the State Government of Melaka, the Manipal Group and members of Indian Diaspora in Malaysia. The local government provided teaching staff, supervisory services along with financial assistance to students. It also allowed use of local government hospitals for training and teaching purposes On the other hand, the private partners contributed to the infrastructure for the Melaka campus with a provision of patient care service and training of staff in the health centers. The private partners also contributed by partially conducting the program in their India campus, as there was a shortage of faculty for basic sciences in Malaysia Benefits Creation of the new college was a step in the direction of increasing the doctor : population ratio. It also led to decreased financial burden for the government as infrastructure costs were borne by the college. The private partners on the other hand, gained an opportunity to establish a college leading to increased overseas exposure, establishment of global reputation and brand name. Funding Through Endowments In November 2008, Indian School of Business (ISB) signed an agreement with the Government of Punjab (GOP) to set up its second campus in India at the Knowledge City, Mohali. The cost of the project is INR 3000 million. To fund the project, ISB succeeded in getting four endowments of INR 500 million each from its founder supporters the Bharti Group, the Max Group, the Hero Group and the Punj Lloyd Group. In return for the endowments, ISB would set up four specialist centers for excellence named after its founder supporters, Max India Institute of Healthcare Management Bharti Institute of Public Policy BML Munjal Institute of Manufacturing and Operation Excellence Punj Lloyd Institute of Physical Infrastructure Management These centers of excellence would promote research in their specific fields as well as provide specialisation  options for management students Benefits For ISB, success in raising a large part of its project costs through endowments enabled achievement of its  growth plans. ISB also recieved commitments from its supporters to provide internships and recruit students from this campus On the other hand, the founder supporters were able to further research in areas of interest to them, as well as  attract more management students to focus and specialize in these areas. They also furthered the cause of improving the quality of education in their home state by attracting a leading management institution Recommendations Encourage private sector funding of higher education Introduce innovative PPP models which encourage high quality players from the private  sector to invest more in the higher education sector Provide tax incentives and simplify norms to attract private investments Enhance impact of Government funding Introduce a mechanism of performance based funding by the Government Encourage HEIs to move towards higher self generation of funds to meet operational expenses, so that Government funds are spent increasing on capacity expansion and quality improvement Rationalize tuition fee and build strong financing structures Rationalize tuition fee structures to internationally accepted levels (~25% of income) which would enable self sustenance of HEIs and reduce strain on public funding Differential pricing may be accorded for students belonging to economically weaker  sections Create robust financing system to support rationalized fee structure through encouragement of scholarships (public and industry sponsored) and increasing student loans coverage through special schemes Support raising of revenue through alternate sources Encourage higher education institutes to identify and develop innovative sources of income other than fees and grants, such as monetization of IP (research patents, licenses), organizing seminars/ public events, consulting etc. For this purpose, set out model practices, incentivize faculty through revenue sharing, and institutes through higher grants for better performance on these factors Develop supportive guidelines and norms to increase utilization of existing assets/land banks of higher education institutes Encourage industrial houses/individuals to give endowments to both public and private HEIs, by providing a 125% weighted tax deduction to all endowments to recognized universities, preferential allotment of seats etc. Improve management of finances at HEIs Support HEIs to obtain access to best in breed finance professionals Conduct seminars and short term courses to share best practices in management of operations at HEIs in order to improve utilization of available finances

The Age of European Exploration Essay -- European Europe History

The Age of European Exploration The age of exploration was filled with courageous voyagers and conquistadores from all over Europe, much like today, there was much competition for land rights. The main disputes were between Spain and Portugal. And these are the representatives from not only these two countries, but surrounding ones as well. Christopher Columbus was a sea captain from Genoa. He first tried to convince Portugal, then Spain to sponsor a voyage to Asia across the Atlantic. Columbus thought that the voyage would take two months, others said four months, but he left with enough food and supplies for only two months. He landed in the West Indes (Bahamas, Haiti, Cuba) when the two months of supplies ran out. Their voyage began on August 3, 1492, from Palos, Spain and ended on October 12 when land was sighted at the Americas. Amerigo Vespucci, an Italian that represented the Medici Bank in Spain, chartered the coastline of Central America and described this as the "Mundus Novus", meaning "New World". In 1507, a German carto...