Imprimante S.A. Cross-Border Valuation and Parity Conditions Harvard Case Solution & Analysis


Imprimante S.A is one of the manufacturersoperating in many other countries, for this reason, the cross border valuation of the project is common. It has engaged in responsibly manufacturing copiers, printers, fax machines and other related equipment. The documentoutsourcing services and consulting services have accounted for about 18% of the overall revenues of the company. The occurrence of the global recession in 2008 hasfallen the sales of the company in the same year. The actual profit returns haven’t surpassed than the projected,which have resulted in net loss. As far as spreading out its business into the international arena is concerned, the company has been very slow in taking initiatives and decisions due to the recession as compared to its competitors.

Despite the economic recession, the company hasbeen growing and positioning itself in the emerging and developing markets such as in BRIC countries. The operations of the company has been overseen and managed worldwide through a broad network of subsidiaries. The competitors of the company has served niche markets and gained profits, they have also developed after sales services and consulting businesses at an optimum level than Imprimante, following its competitors, the company has offered its products to the broader spectrum of countries and had successfully served in health care, financial services and government sectors. The company has contemplated to diversify its business operations worldwide and has a distinct vision to have a strong and positive presence in the international markets.

Imprimante S.A. Cross-Border Valuation and Parity Conditions Harvard Case Solution & Analysis

Situational Analysis:

Imprimante S.A was considering an overhaul of the processes of the company. The Mexican investment had called for the installation and purchase of the newly automated machines in order to manufactureand recycle toner and print cartridges. Following to this situation requires calculation of the net present value along with complete analysis of the project. The company has intended to go forward only with the project whose net present value will be more than 0 or positive. A distinction was made between Mexican peso and euro in order to determine which currency the company would choose in the future to maximize profits returns. Additionally, the analysis of the related risk, cost and possible inflation that are undoubtedly involved ina project of this magnitude. One of the questionsthat have confronted the analysts at headquarters in France is whether to perform cross border valuation of the project in pesos or euro.


Initially, the net present value of inflows have been calculated, it is assumed that the capital project might provide a series of positive cash inflows over the period of time. When Imprimante S.A tends to project the net cash flows on yearly basis, it can account for the depreciation tax shield which have resulted from tax savings on the depreciation of the assets. In order to compute this figure, tax depreciation is multiplied by the federal corporate tax rate which was 35% for the year. The amount 12731.25 is represented as the tax savings for the company, it can be added with the cash flows that the company has projected for the upcoming years..................

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