Question
A large US based bottling company is considering an investment in a manufacturing facility in one of two low cost countries: Philippines and China. The
A large US based bottling company is considering an investment in a manufacturing facility in one of two low cost countries: Philippines and China. The following applies:
|
| Philippines | China |
| Investment price | 2400 million pesos | 665 million RMB |
| Cost per Bottle | 20 pesos | 3.5 RMB |
| Projected Annual Cost Savings | 600 million pesos | 140 million RMB |
| Additional Investment of Imported Equipment | 25 million US$ | 25 million US$ |
| Exchange Rate | Pesos 40 / US$ | RMB 7/US$ |
If RMB depreciates 20% against US$, what happens to the savings on investment in Philippines in comparison with China?
| Increases | ||
| Stay the same | ||
| Decreases | ||
| None of above |
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Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
13th Edition
978-0697789938
