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    Pixonix Inc. – Addressing currency Exposure | BPP/ FIN 422 International Economics and Finance | | JatinBelaniSiddharthLadsariyaMansiShahHimaniShethHarmeetSinghJayantVerma | | | Executive Summary Pixonix was a graphic design company that operated in Toronto, Canada. Pixonix licensed proprietary tools and software through a US Company at an annual cost of USD 7.5 mn. Since Pixonix was based in Canada, its revenues were based in Canadian dollars and expenses had to be paid in USD. Pixonix was required to make payments at the end of June each year and had to annually convert CAD cashflows into USD. Recently the CAD was strengthening and company’s profitability had been impacted positively. The outlook on the CAD for the future was that the CAD was expected to appreciate during the first half of the next year. CFO Mikayla Cain was worried about the effect the volatility in CAD would have on the company’s cash flows. To address the firms currency exposures Cain was considering two strategies – purchase forward contracts and purchase USD call options. This document analyses the benefits and tradeoffs of using currency forward / options from the prospective of Pixonix. Implication of leaving the USD exposure unhedged In case if Pixonix does not hedge its USD liability, there is a possibility of it experiencing volatility in its cash flows. This could lead to two possible effects. First effect is that in case if CAD depreciates with respect to USD, Pixonix can make losses due to its unhedged currency exposure. One the other hand in case if CAD further appreciates with respect to USD (which is the more likely case) then they will save on the transaction costs of hedging and can benefit from the potential upside of CAD appreciation. Refer to Appendix 1 for detailed calculations. We have considered 3 different scenarios with different currency exchange rates. Now to determine whether we are making a profit or a loss we are comparing the amount of liability we have without a hedge using currency exchange rate only (column 2) with the liability using today’s spot rate (column 3-ignoring interest rates). Hence we see that we make a profit only when CAD appreciates (scenario 1) and are making losses in the other scenarios (Scenario 2, 3). Benefits and Tradeoffs of using Currency Forwards Since Pixonix has a USD liability it can enter into long forward contract to hedge its currency exposure. Since the amount is due at the end of January, they can enter into 3 months forward contract at an ask price of 0.93499 (From Exhibit 1). Refer to Appendix 2 for detailed calculations. Thus as seen with forward contract, Pixonix will hedge its currency exposure by locking its exchange but will not be able to take benefit of any appreciation in the CAD as it is obligated to transact at the exchange rate specified in the contract. Thus using forward contract is definitely a better option using no hedge as the downside risk is eliminated. Since Pixonix is not in the business of currency speculation it would want to eliminate variability in its earnings due exchange rate risk, as there is no added advantage of assuming the currency risk. Benefits and Tradeoffs of using Currency Options Buying currency options is a more flexible form of hedging than setting up a forward foreign exchange contract. The instrument allows limited risk as in the case of non exercise of option you only lose the option premium. Although options provide Pixonix with the flexibility it also has some disadvantages such as the costs of trading options (premium) which makes the options more expensive. Appendix 3 details the performance of option hedge under different scenarios. As seen in Appendix 3 for an option with a strike price of 93.5, Pixonix will have to pay an option premium of 0.129 million CAD. The same has been calculated by calculating the premium per option with a face value of 100 USD using the formula: Premium per option: (Ask P

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    Pixonix Inc. – Addressing currency Exposure | BPP/ FIN 422 International Economics and Finance | | JatinBelaniSiddharthLadsariyaMansiShahHimaniShethHarmeetSinghJayantVerma | | | Executive Summary Pixonix was a graphic design company that operated in Toronto, Canada. Pixonix licensed proprietary tools and software through a US Company at an annual cost of USD 7.5 mn. Since Pixonix was based in Canada, its revenues were based in Canadian dollars and expenses had to be paid in USD. Pixonix was required to make payments at the end of June each year and had to annually convert CAD cashflows into USD. Recently the CAD was strengthening and company’s profitability had been impacted positively. The outlook on the CAD for the future was that the CAD was expected to appreciate during the first half of the next year. CFO Mikayla Cain was worried about the effect the volatility in CAD would have on the company’s cash flows. To address the firms currency exposures Cain was considering two strategies – purchase forward contracts and purchase USD call options. This document analyses the benefits and tradeoffs of using currency forward / options from the prospective of Pixonix. Implication of leaving the USD exposure unhedged In case if Pixonix does not hedge its USD liability, there is a possibility of it experiencing volatility in its cash flows. This could lead to two possible effects. First effect is that in case if CAD depreciates with respect to USD, Pixonix can make losses due to its unhedged currency exposure. One the other hand in case if CAD further appreciates with respect to USD (which is the more likely case) then they will save on the transaction costs of hedging and can benefit from the potential upside of CAD appreciation. Refer to Appendix 1 for detailed calculations. We have considered 3 different scenarios with different currency exchange rates. Now to determine whether we are making a profit or a loss we are comparing the amount of liability we have without a hedge using currency exchange rate only (column 2) with the liability using today’s spot rate (column 3-ignoring interest rates). Hence we see that we make a profit only when CAD appreciates (scenario 1) and are making losses in the other scenarios (Scenario 2, 3). Benefits and Tradeoffs of using Currency Forwards Since Pixonix has a USD liability it can enter into long forward contract to hedge its currency exposure. Since the amount is due at the end of January, they can enter into 3 months forward contract at an ask price of 0.93499 (From Exhibit 1). Refer to Appendix 2 for detailed calculations. Thus as seen with forward contract, Pixonix will hedge its currency exposure by locking its exchange but will not be able to take benefit of any appreciation in the CAD as it is obligated to transact at the exchange rate specified in the contract. Thus using forward contract is definitely a better option using no hedge as the downside risk is eliminated. Since Pixonix is not in the business of currency speculation it would want to eliminate variability in its earnings due exchange rate risk, as there is no added advantage of assuming the currency risk. Benefits and Tradeoffs of using Currency Options Buying currency options is a more flexible form of hedging than setting up a forward foreign exchange contract. The instrument allows limited risk as in the case of non exercise of option you only lose the option premium. Although options provide Pixonix with the flexibility it also has some disadvantages such as the costs of trading options (premium) which makes the options more expensive. Appendix 3 details the performance of option hedge under different scenarios. As seen in Appendix 3 for an option with a strike price of 93.5, Pixonix will have to pay an option premium of 0.129 million CAD. The same has been calculated by calculating the premium per option with a face value of 100 USD using the formula: Premium per option: (Ask P

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    © All Rights Reserved
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    42 views8 pages

    Solid Waste Disposal

    Uploaded by

    Saad Ahmad
    Pixonix Inc. – Addressing currency Exposure | BPP/ FIN 422 International Economics and Finance | | JatinBelaniSiddharthLadsariyaMansiShahHimaniShethHarmeetSinghJayantVerma | | | Executive Summary Pixonix was a graphic design company that operated in Toronto, Canada. Pixonix licensed proprietary tools and software through a US Company at an annual cost of USD 7.5 mn. Since Pixonix was based in Canada, its revenues were based in Canadian dollars and expenses had to be paid in USD. Pixonix was required to make payments at the end of June each year and had to annually convert CAD cashflows into USD. Recently the CAD was strengthening and company’s profitability had been impacted positively. The outlook on the CAD for the future was that the CAD was expected to appreciate during the first half of the next year. CFO Mikayla Cain was worried about the effect the volatility in CAD would have on the company’s cash flows. To address the firms currency exposures Cain was considering two strategies – purchase forward contracts and purchase USD call options. This document analyses the benefits and tradeoffs of using currency forward / options from the prospective of Pixonix. Implication of leaving the USD exposure unhedged In case if Pixonix does not hedge its USD liability, there is a possibility of it experiencing volatility in its cash flows. This could lead to two possible effects. First effect is that in case if CAD depreciates with respect to USD, Pixonix can make losses due to its unhedged currency exposure. One the other hand in case if CAD further appreciates with respect to USD (which is the more likely case) then they will save on the transaction costs of hedging and can benefit from the potential upside of CAD appreciation. Refer to Appendix 1 for detailed calculations. We have considered 3 different scenarios with different currency exchange rates. Now to determine whether we are making a profit or a loss we are comparing the amount of liability we have without a hedge using currency exchange rate only (column 2) with the liability using today’s spot rate (column 3-ignoring interest rates). Hence we see that we make a profit only when CAD appreciates (scenario 1) and are making losses in the other scenarios (Scenario 2, 3). Benefits and Tradeoffs of using Currency Forwards Since Pixonix has a USD liability it can enter into long forward contract to hedge its currency exposure. Since the amount is due at the end of January, they can enter into 3 months forward contract at an ask price of 0.93499 (From Exhibit 1). Refer to Appendix 2 for detailed calculations. Thus as seen with forward contract, Pixonix will hedge its currency exposure by locking its exchange but will not be able to take benefit of any appreciation in the CAD as it is obligated to transact at the exchange rate specified in the contract. Thus using forward contract is definitely a better option using no hedge as the downside risk is eliminated. Since Pixonix is not in the business of currency speculation it would want to eliminate variability in its earnings due exchange rate risk, as there is no added advantage of assuming the currency risk. Benefits and Tradeoffs of using Currency Options Buying currency options is a more flexible form of hedging than setting up a forward foreign exchange contract. The instrument allows limited risk as in the case of non exercise of option you only lose the option premium. Although options provide Pixonix with the flexibility it also has some disadvantages such as the costs of trading options (premium) which makes the options more expensive. Appendix 3 details the performance of option hedge under different scenarios. As seen in Appendix 3 for an option with a strike price of 93.5, Pixonix will have to pay an option premium of 0.129 million CAD. The same has been calculated by calculating the premium per option with a face value of 100 USD using the formula: Premium per option: (Ask P

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    of 8

    PROJECT REPORT

    TOPIC:
    STAKEHOLDERS REGISTER FOR COLLECTION AND
    DISPOSAL OF SOLID WASTE
    GROUP MEMBERS:
    SHAUKAT ALI
    ASGHAR ALI
    SABA ASIM
    IQRA KHALID
    HUMA MALIK

    SUBMITION DATE:
    21ST AUG, 2O15

    Stakeholders of Project
    The importance of stakeholder participation should be recognized in specific
    aspects of project preparation:

    Addressing the interest of stakeholders both to enhance the economic and


    social development and well-being of recipients.
    Identifying conflict of interests between stakeholders
    Identifying relations between stakeholders that can be built upon to
    improve success
    Assessing the most appropriate way that different stakeholders should
    participate at different stages of the project Stakeholders are "key persons,
    groups or institutions with an interest in a project or programme".

    Stakeholders Categories for Solid Waste Management:


    Primary stakeholders; who are directly affected, either positively or
    negatively, by the implementation of a project or programme of a solid
    waste management project and include householders and citizens receiving
    waste management services.
    Secondary stakeholders who play some intermediary role and may have
    an important effect on the project/programme outcome These include
    urban government (municipalities) and their employees, other
    national/state government departments, NGOs, CBOs & Area Based
    Organizations. donor/lending agencies, waste pickers, private sweepers,
    small entrepreneurs and contractors working on area-based waste
    collection.
    External stakeholders who are not directly involved, but may
    nevertheless be affected by a specific project or programme. In solid waste
    management this is an important group and there are many potential
    actors. For example: residents of nearby communities; itinerant waste
    buyers; middle-men in the waste recycling trade; waste reprocessors.

    Importance of relationship among multiple Stakeholders:


    An effective relationship between the various stakeholders within a stakeholder
    framework is one based on compromise and consensus rather than confrontation.
    Any action between local government, Contractor and FGEHF and all others
    should refer to such a framework rather than be driven by immediate crisis
    issues. The Framework illustrates the changing relationships, attitudes and

    experiences between a variety of stakeholders in the way communities,


    neighborhoods and cities are beginning to co-operate in the field of solid waste
    management.

    Stakeholders Register

    Identification
    Information

    Name
    Organization
    Location
    Role in the project
    Contact Information
    Major Requirements

    Assessment
    Information

    Stakeholder
    Classification

    Identification
    Information

    Main Expectations
    Potential Influence
    Phase in the life cycle
    with the most interest
    Internal / external
    Supporter/neutral/resisto
    r
    Name
    Organization
    Location
    Role in the project
    Contact Information
    Major Requirements

    Assessment
    Information

    Stakeholder

    Main Expectations
    Potential Influence
    Phase in the life cycle
    with the most interest
    Internal / external

    Capital Development Authority


    Sector G/5, Islamabad
    Secondary
    Deputy Commissioner, CDA
    Solid waste disposal and
    collection
    Society Development
    Keep Satisfied
    Initialization till Closeout

    External
    Supporter

    G/9 Elected Councilor


    Sector G/9, Islamabad
    Secondary
    Municipal Councilors
    Solid waste disposal and
    collection
    Society Development
    Manage Closely
    Initialization till Closeout
    External

    Classification

    Identification
    Information

    Supporter/neutral/resisto
    r
    Name
    Organization
    Location
    Role in the project
    Contact Information
    Major Requirements

    Assessment
    Information

    Stakeholder
    Classification

    Identification
    Information

    Main Expectations
    Potential Influence
    Phase in the life cycle
    with the most interest
    Internal / external
    Supporter/neutral/resisto
    r
    Name
    Organization
    Location
    Role in the project
    Contact Information
    Major Requirements

    Assessment
    Information

    Stakeholder
    Classification

    Identification

    Main Expectations
    Potential Influence
    Phase in the life cycle
    with the most interest
    Internal / external
    Supporter/neutral/resisto
    r
    Name
    Organization
    Location
    Role in the project

    Supporter

    Private Sector
    Sector G/9, Islamabad
    Secondary
    Private sweepers
    Solid waste disposal and
    collection
    Clean environment
    Keep Informed
    Implementation
    External
    Neutral

    Municipal corporation

    Sector G/9, Islamabad


    Secondary
    Municipal sweepers

    Solid waste disposal and


    collection
    Clean environment
    Keep Informed
    Implementation

    External
    Neutral

    Fauji Fertilizer Company limited


    Primary

    Information
    Assessment
    Information

    Stakeholder
    Classification

    Identification
    Information

    Contact Information

    Director Fauji Fertilizer

    Major Requirements

    Solid waste disposal and


    collection
    Sustainability
    Manage Closely
    Initialization till Closeout

    Main Expectations
    Potential Influence
    Phase in the life cycle
    with the most interest
    Internal / external
    Supporter/neutral/resisto
    r
    Name
    Organization
    Location
    Role in the project
    Contact Information

    Major Requirements
    Assessment
    Information

    Stakeholder
    Classification

    Identification
    Information

    Main Expectations
    Potential Influence
    Phase in the life cycle
    with the most interest
    Internal / external
    Supporter/neutral/resisto
    r
    Name
    Organization
    Location
    Role in the project
    Contact Information

    Major Requirements
    Assessment
    Main Expectations

    Internal
    Supporter

    Comsats University
    Chack Shehzad
    Secondary
    Department of Environmental
    Sciences
    Solid waste disposal and
    collection
    Healthy Environment
    Keep Informed
    Planning

    External
    Supporter

    Agriculture Peshawar University


    Peshawar
    Secondary
    Department of Agriculture
    Sciences
    Solid waste disposal and
    collection
    Healthy environment

    Information

    Stakeholder
    Classification

    Potential Influence
    Phase in the life cycle
    with the most interest

    Keep Informed
    Planning

    Internal / external
    Supporter/neutral/resisto
    r

    External
    Supporter

    Power Interest Grid

    HIGH
    CDA

    G/9 Elected Councilor

    Powe
    Private sweepers
    Municipal sweepers

    LOW

    Interes

    HIGH

    L-Shape Matix

    CDA

    CDA

    G/9
    Elected
    Council
    or
    Private
    sweepe
    rs
    Municip
    al
    sweeper
    s

    Total

    G/9
    Elected
    Council
    or

    Private
    sweep
    ers

    Municip
    al
    sweepe
    rs

    Row
    Total

    Rel.
    Dec.Val
    ue

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