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A US based computer manufacture produces and sells laptops in South America through two manufacturing facilities: one in Argentina and the other in Brazil. The
A US based computer manufacture produces and sells laptops in South America through two manufacturing facilities: one in Argentina and the other in Brazil. The following applies:
| Argentina | Brazil |
Investment price | 200 million US$ | 200 million US$ |
Cost per Laptop | 900 pesos | 600 reals |
Price per Laptop | 1200 pesos | 800 reals |
Projected Annual Earnings | 150 million pesos | 100 million reals |
Exchange Rate | Pesos 3 / US$ | Reals 2/US$ |
If Brazil real depreciates 20% against the US$, what is the return on investment in Brazil, if other things remain the same?
15% | ||
20% | ||
25% | ||
30% |
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