Explain what impact the change in the currency exchange rate

Assignment Help Accounting Basics
Reference no: EM13123744

International Electronic Inc. invested $1,000,000 to build a plant in a foreign country. The labor and materials used in production are purchased locally. The plant expansion was estimated to produce an internal rate of return of 20% in U.S. dollars terms. Due to a currency crisis, the currency exchange rate between the local currency and the U.S. dollar doubled from two local units per U.S. dollar to four local units per U.S. dollar. -Assume that the plant produced and sold product in the local economy. Explain what impact this change in the currency exchange rate would have on the project's internal rate of return. -Assume that the plant produced product in the local economy but exported the product back to the United States for sale. Explain what impact the change in the currency exchange rate would have on the project's internal rate of return under this assumption. -Since the exchange rate can change quickly, do you agree that International should expand in foreign countries or should they only produce product in the U.S.?

Reference no: EM13123744

Questions Cloud

Cost of transporting goods and the price : The cost of transporting goods and the price of obtaining information has decreased substantially over the past 100 years.
Explain the just-in-time (jit) approach : Explain the Just-in-Time (JIT) approach in your own words.
What is its sustainable growth rate : A company has a retention rate of 50%, sales of $25,000, beginning equity of $50,000 and profit margins of 10%, an asset turnover ratio of .75 and debt of $10,000. What is its sustainable growth rate?
Conduct hypothesis test and observe values for sample : You conduct a hypothesis test and you observe values for the sample mean and sample standard deviation when n=25 that do not lead to the rejection of the null hypothesis (the p value is .0667).
Explain what impact the change in the currency exchange rate : International Electronic Inc. invested $1,000,000 to build a plant in a foreign country. The labor and materials used in production are purchased locally.
Distance between points and difference quotient : Find the domain and range of the function: f(x)=6xsquared+4. Find the distance between the two plotted points;(-5,2) (4,-4). Using graph of f(x)=x squared as a guide, graph the function; g(x)=(x-3)squared+4
The murder of roger ackroyd : In Agatha Christie's "The Murder of Roger Ackroyd": What was the role of Caroline Sheppard?
Compute the predetermined overhead rate : Neffer Services Inc. leases access to high-speed computers to small businesses. It provides the following information for the year.
Why is differentiation not a linear transformation from v : Why is differentiation not a linear transformation from V to V? What is the image of V under the operation of taking the second derivative?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Budgets useful in planning process

Why are budgets useful in the planning process? a) They provide management with information about the company's past performance. b) They help communicate goals and provide a basis for evaluation.

  Budgeted volume and standard volume

Printers Inc. manufactures and sells a mid-volume color printer (MC) and a high-volume color printer (HC). Each MC requires 100 direct labor hours to manufacture, and each HC requires 150 direct labor hours.

  Financial reports and business decisions

Suppose you have been employed into a new firm to oversee the accounting department. Explain what type of financial reports would you expect to see in your department?

  Determining long term investments

Dogwood City's water enterprise fund received interest of 10,000 on long term investments. How should this amount be reported on the statement of cash flows?

  Determining firm gross profit

Your firm has the following income statement items; sales of 50,250,000; income tax of 1,744,000.00; operating expenses of 10,115,000; cost of goods sold of 35,025000 and interest expense of 750,000. What is the amount of the firm's gross profit.

  Which city would you prefer to live in

In a sample of 1,000 representing a survey from the entire population, 650 people were form Laketown, and the rest of the people were from River City. Out the the sample, 19 people had some form of cancer. Thirteen of these people were from Laketo..

  Expenses and non-controlling interest

An enterprise that holds a variable interest in variable interest entity is required to consolidate assets, liabilities, revenues and expenses, and the non-controlling interest of that entity if:

  Prepare a balance sheet

Prepare an absorption costing income statement for the quarter ending March 31 as shown in Schedule 9 in the chapter.  Prepare a balance sheet as of March 31

  Actual revenues reported in the income statement

Assume you are reviewing a company's annual report. In addition to actual revenues reported in the income statement, what other information disclosed would give you help in estimating this company's future revenues?

  Journal entry-record stock issuance

A corporation issues $2,000 Shares of common stock for $32,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for

  Standard direct material cost for cloth

The cost of the cloth is $3 per yard. The standard direct material cost for cloth per unit of finished product is:

  Gain or loss on the basis of new property

Elizabeth's property had an adjusted basis of $9000 and a fair market value of $10,500, and Elizabeth gave Debbie $4500 in cash. Determine Debbie's and Elizabeth's realized gain of loss, recognized gain or loss and the basis in their new property.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd