Honda invested $1 billion dollars to build a factory in Ohio when the yen was 100 Yen to 1 USD. In the first year, the factory had a profits of $80 million, which remained in the U.S. until the end of the year. At the end of the year, the exchange rate was 125 Yen to 1 USD.

What was the cash return on investment for the first year to Honda as it compiled its Yen-based accounts in Tokyo?

Was it a good idea for Honda to build an American factory. What factors need to be considered in this decision?