المحاسب الإداري المعتمد الجزء 2 F. Professional Ethics

Brackwell: An Overseas Data Center Paid For in Euros

Brackwell Data Estates plc

Question of 6 Brackwell: An Overseas Data Center Paid For in Euros

Brackwell: An Overseas Data Center Paid For in Euros Case-based question

الحالة

Brackwell Data Estates plc is a UK-listed developer that designs, builds and sells data-center buildings in the United Kingdom and continental Europe. It reports in pounds sterling (GBP).

Brackwell has signed a contract to develop a powered-shell data-center building on a leased site in Veldmark, a port city in the euro area. A powered shell is the structure and its grid connection; the buyer installs its own cooling and IT equipment. Brackwell will sell the finished building to Lindqvist Networks, a privately owned telecom operator. The signed sale agreement fixes the price at EUR 62.0 million, payable in full on the completion date, exactly three years from today. Brackwell's development cost for the project is EUR 38.4 million. The board requires a return of 11% a year, measured in GBP, on the project.

The treasury team has gathered these exchange rates, all quoted as GBP per 1 EUR:

Rate	GBP per 1 EUR
Spot rate today	0.8600
Treasury's forecast of the spot rate on the completion date	0.8200
Bank's three-year forward rate, for delivery on the completion date	0.8410

The forecast is Brackwell's own estimate of a future market rate. The forward rate is a price at which the bank is willing to contract with Brackwell today.

Anti-bribery rule. The general counsel has summarized for the board the anti-bribery rule that applies to Brackwell. Treat this summary as a fact of the case: a company, its employees and anyone acting on its behalf must not offer, promise or give money or anything else of value, directly or through a third party, to a foreign public official in order to influence that official's decisions and so obtain or keep business or a business advantage. A foreign public official is any officer or employee of a national, regional or local government outside the United Kingdom, of a government agency, or of a government-owned business. Brackwell's code of conduct adopts this rule and, in addition, forbids bribes to employees of private businesses. The finance director has been asked to approve a list of proposed payments put forward by Brackwell's permitting consultant in Veldmark and by its own project team.

Post-completion audit. Brackwell's capital-investment policy requires a post-completion audit of every project whose development cost exceeds GBP 25 million. The Veldmark project qualifies, so the internal audit team, which reports to the board's audit committee, will carry out an audit once the sale has closed.

الافتراضات

Treat the EUR 38.4 million development cost as a single payment made today, converted to GBP at today's spot rate. The EUR 62.0 million sale price is received in full at the end of Year 3.
The sale price and completion date are fixed by contract. Ignore taxes, transaction costs, and the credit risk of the buyer and of the bank.
Exchange rates are quoted as GBP per 1 EUR, so multiplying a EUR amount by the rate gives GBP.
Discount factors to four decimal places are given in resources r1 and r2. Where a question says to use them, use the factor exactly as printed and round only the final answer.
In the question on exchange-rate drivers, consider each development separately, hold all other factors constant, and use only the channel that the statement names.

مواد مرجعية

Present value of 1

Periods (n)	9%	10%	11%	12%
1	0.9174	0.9091	0.9009	0.8929
2	0.8417	0.8264	0.8116	0.7972
3	0.7722	0.7513	0.7312	0.7118
4	0.7084	0.6830	0.6587	0.6355

Factor = 1 ÷ (1 + r)^n, rounded to four decimal places. Where a question tells you to use this table, use the factor exactly as printed.

Present value of an ordinary annuity of 1

Periods (n)	9%	10%	11%	12%
1	0.9174	0.9091	0.9009	0.8929
2	1.7591	1.7355	1.7125	1.6901
3	2.5313	2.4869	2.4437	2.4018
4	3.2397	3.1699	3.1024	3.0373

Factor = sum of 1 ÷ (1 + r)^t for t = 1 to n (end-of-period payments), rounded to four decimal places.

The list contains the four payments below. Which ONE is prohibited by the foreign-public-official anti-bribery rule summarized in the case?

الإجابة Pay Veldmark's published building-permit application fee of EUR 18,500 by bank transfer to the city treasury, against an official receipt. Pay the consultant an extra EUR 24,000 "acceleration fee", which the consultant says will be passed to the city planning officer who decides the permit, so that the permit is issued before the required environmental report is filed. Give Lindqvist Networks' procurement manager EUR 30,000 of gift cards so that she signs off Brackwell's proposed changes to the building specification without the technical review that the sale agreement requires. Pay a Veldmark law firm its standard hourly fees, under a written engagement letter, for preparing the permit application and attending the public hearing.

Complete the treasurer's briefing note. The treasury's forecast implies that, by the completion date, the GBP will Expected movement of the GBP against the EUR. At the forecast rate, the EUR 62.0 million sale price would convert to approximately GBP Value at the forecast rate million. Compared with converting the same amount at today's spot rate, that is Change against today's spot rate .

What is the Veldmark project's NPV, in millions of GBP? Convert the development cost at today's spot rate and the sale proceeds at the treasury's forecast rate for the completion date. Discount at the board's 11% GBP required return, using the factor from resource r1 exactly as printed, and round only the final answer to two decimal places. If the NPV is negative, enter it with a minus sign.

الإجابة GBP millions

بـ 2 منازل عشرية. يمكن كتابة المبلغ السالب بإشارة ناقص أو بين قوسين.

Brackwell wants to remove the risk that a weaker EUR will reduce the GBP value of the EUR 62.0 million it will receive on the completion date. Which ONE transaction hedges this exposure?

الإجابة Borrow GBP today, convert it to EUR at today's spot rate and place the euros on deposit until the completion date. Buy call options giving Brackwell the right to buy EUR 62.0 million at GBP 0.8400 per EUR on the completion date. Sell EUR 62.0 million forward to the bank for delivery on the completion date at GBP 0.8410 per EUR. Write put options that oblige Brackwell, if the holder exercises, to buy EUR 62.0 million at GBP 0.8400 per EUR on the completion date, and keep the premium.

The treasurer lists five developments that could move the exchange rate before the completion date. Treat each one separately, assume everything else is unchanged, and consider only the channel named. 1. The UK's central bank raises UK interest rates, while euro-area interest rates and expected inflation in both economies stay the same. Through international investors' demand for interest-bearing deposits and bonds, this would tend to UK interest rates rise the GBP against the EUR. 2. Inflation in the euro area rises relative to inflation in the UK. Through the relative prices of goods traded between the two economies, this would tend to make the quoted rate (GBP per 1 EUR) Euro-area inflation rises . 3. UK national income grows faster than euro-area income. Through UK demand for goods imported from the euro area, this would tend to UK income grows faster the GBP against the EUR. 4. The UK places new tariffs on euro-area products entering the UK, and the euro area does not retaliate. Through UK demand for those imports, this would tend to UK tariffs on euro-area imports the GBP against the EUR. 5. Currency traders come to expect the GBP to lose value against the EUR over the coming months. Through the positions traders take today, this would tend to make the quoted rate (GBP per 1 EUR) Traders expect GBP weakness now.

Once the sale has closed, the internal audit team will carry out the post-completion audit required by Brackwell's policy. Select the THREE benefits Brackwell can reasonably expect from it.

اختيار 3 إجابات. المحدد 0 / 3

الإجابة A check on whether the board's 11% required return was the right rate, based on whether the Veldmark project's actual NPV turned out positive. A comparison of the actual development cost, exchange rates and timing with the figures assumed in the board's approval paper. A revised version of the board's approval paper, with its cost, exchange-rate and timing estimates updated so that its NPV matches the actual outcome. Identification of cash flows that the approval analysis left out, such as permit costs or currency-conversion charges that arose during the project. A recalculated NPV at the actual exchange rates, which the board can use to decide whether to go ahead with the Veldmark sale. Lessons, for example about currency forecasting and overseas permitting, that improve how Brackwell appraises its next overseas project.

تظهر الدرجات والإجابات الصحيحة والشروح فور تسليم الإجابات. ولا يحصل السؤال غير المُجاب على أي درجة.

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