21. Valuation of Wal-Marts International Business.

In addition to all of its stores in the United

States, Walmart Inc., Stores has 13 stores in Argentina, 302 stores in Brazil, 289 stores in
Canada, 73 stores in China, 889 stores in Mexico, and 335 stores in the United Kingdom.
Overall, it has 2,750 stores in foreign countries. Consider the value of Walmart as being
composed of two parts, a U.S. part (due to business in the United States) and a non-U.S. part
(due to business in other countries). Explain how to determine the present value (in dollars) of
the non-U.S. part assuming that you had access to all the details of Walmart businesses
outside the United States.
ANSWER: The non-U.S. part can be measured as the present value of future dollar cash
flows resulting from the non-U.S. businesses. Based on recent earnings data for each store
and applying an expected growth rate, you can estimate the remitted earnings that will come
from each country in each year in the future. You can convert those cash flows to dollars
using a forecasted exchange rate per year. Determine the present value of cash flows of all
stores within one country. Then repeat the process for other countries. Then add up all the
present values that you estimated to derive a consolidated present value of all non-U.S.
subsidiaries.