Borg Controls, a Canadian company, has a net investment in its German subsidiary of $2.68 million. The

Question:

Borg Controls, a Canadian company, has a net investment in its German subsidiary of $2.68 million. The fi rm attempts to earn a 15% pretax return on its investment. Variable costs for the German subsidiary are 60% of revenues. Annual fi xed costs are €321,000. For the current year, the manager of the German subsidiary anticipates revenues of €1.7 million. The is expected to be €1.6 = $1.
REQUIRED
A. If operations meet expectations, what is the rate of return that Borg Controls will earn from its German subsidiary?
B. What level of revenue in euros would be required of the subsidiary for the parent to earn exactly a 15% rate of return in dollars, assuming no changes in the Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...

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A Expected pretax income 1700000 0601700000 321000 359000 Con...View the full answer

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