Global Electronics Inc. invested $ 1,000,000 to build a plant in a foreign country. The labor and

Question:

Global Electronics 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 of 20% in U. S. dollar terms. Due to a currency crisis, the currency 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.
a. Assume that the plant produced and sold product in the local economy. Explain what impact this change in the currency would have on the project’s
b. 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 would have on the project’s under this assumption.

Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... 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...