3.

Renben Corp is a US-Based MNC with a British subsidiary that earned BP sterling 10,000,000 in Year 1 and again in Year 2. These earnings are then consolidated and translated to US dollars at the weighted average exchange rate for the year.

If that rate was $1.70 for Year 1 and $1.50 for Year 2 what are the translated earnings for Renben's subsidiary for each year?

If Renben's earnings per share were based on 10,000,000 shares outstanding, and if the prevailing P/E ratio for Renben's industry was 20, what would the valuation of the firm's stock be for Year 1 versus Year 2?