A Canadian sawmill of Sablerac (functional currency: euro) must be tested at 30 June 20X1. The controller has the net cash flows in Canadian dollars for the next three years (54,000 units, 58,320 units and 62,985.6 units), a pre-tax rate suited to the Canadian dollar of 8 % and a pre-tax rate suited to the euro of 6 %. The controller also knows the spot rate at 30 June 20X1 (1 CAD = 0.68 units EUR) and the average rate for the first half-year (1 CAD = 0.7 units EUR). Determine value in use in Canadian dollars and its equivalent in euros.
- Net cash flow for the first year (CAD)
- 54,000
- Net cash flow for the second year (CAD)
- 58,320
- Net cash flow for the third year (CAD)
- 62,985.6
- Pre-tax rate suited to the Canadian dollar
- 8 %
- Pre-tax rate suited to the euro
- 6 %
- Spot rate at 30 June 20X1 (EUR per 1 CAD)
- 0.68
- Average rate for the first half-year (EUR per 1 CAD)
- 0.7