Analysis of Global Business US Corporation has investments in Indonesia and France. While the return on assets invested in Indonesia last year was 20 percent higher than the return on assets invested in the United States, the return on assets invested in France was 10 percent lower than in the United States.

a. What risks would you consider when deciding whether to invest more in Indonesia?

b. What other factors would you consider in deciding whether to invest more in Indonesia or in France?

c. Would the fact that US Corporation reports a cumulative translation loss on its investment in Indonesia and a cumulative translation gain on its investment in France influence your decision? In what way?

d. Assume that US Corporation decides to invest further in France. If it expects the franc to decline in value against the dollar, how might this affect the way in which the company chooses to finance the expansion?