Case ID: TB0049
Solution ID: 4796
Words: 925
Price $ 75

Nodal Logistics and Custo Brasil Case Solution

Nodal Logistics and Custo Brasil Case solution Nodal Logistics and Custo Brasil Case solution

Case Solution

Nodal Logistic Corporation is a Real Estate Investment Trust (REIT) that centers obtaining of modern stockrooms and logistics property in high thickness markets. It acquires the dominant part of its incomes from rents and rents. With the aim of reinforcing its long haul aggressive position, NLC is anticipating putting $45 million in a 800,000 square foot modern property venture in Sao Paulo, Brazil. Sao Paulo had 250 million square feet of out of date mechanical space including stockrooms. In addition, nearby regions to Sao Paulo contained some prevalent nature of modern space.

Excel Calculations

Forward Contract

Put Option

Currency Clauses

Debt Financing

Value of Net Income  in 2009

Brazilian real-denominated loan

Interest Rate 

Per year Interest

Net Income After Interest- Paid to Bank

Sum of Net income in dollars 

 

 

Brazilian Reais Spot and Forward Quotes

Questions Covered

1. Why is Nodal Logistics interested in entering the Brazilian market and what special challenges do they face in regard to this move? 

2. What kind of currency risk does the Brazilian project pose to Nodal? 

3. What are the primary ways in which Nodal can try to manage this currency risk? 

4. What degree of exposure would Nodal face if they chose to remain uncovered and to what extend can currency risk management alleviate this exposure? 

5. What is your recommendation to John Penman? Other Teams: Prepare a one-pager on the following question: Assess Nodal’s currency risk exposure and their options to manage it.