Question
I have been trying for the last two days to figure out these questions. Would somebody be able to help me figure the questions out,
I have been trying for the last two days to figure out these questions. Would somebody be able to help me figure the questions out, please? Please be sure to show the work, I want get the formulas down in my brain! Thanks ahead of time :)
Number 1: A multinational corporation has purchased a manufacturing plant in a foreign country with an exchange rate of $0.3435 of the foreign currency = $1 USD. This cost the corporation $12,500,000. Soon after the purchase, the country's leadership orders that the plant be nationalized and mandates that the MNC sell the plant at a discounted exchange rate of $0.2241. How much in U.S. Dollars will the MNC lose on the transaction?
Answers:
I am completely lost on how to do these ones. I believe I am supposed to Use the PPP formula, but again..not sure
Number 2: Carl's tires is planning to merge with Joe's Body shop to offer a combined auto repair service shop. Carl's Tires has total costs of $1,500,000 and sales of $2,000,000. Joe's body shop has costs of $2,200,000 and sales of $4,000,000. Together the firms will be able to achieve economies of scope sufficient to reduce costs by $400,000 while maintaining sales at current levels. Calculate the difference between the percentage values of the average costs of merged firms and the combined average costs of two nearby competitors. These competitors continue to sell tires and auto repair separately, having total costs $2,000,000 and sales of $2,500,000 while the other has costs of $2,400,000 and $3,200,000 respectively.
Answers:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Number 1 1 Calculate the initial cost in foreign currency Initial Cost 12500000 2 Convert the initial cost to foreign currency Foreign Currency Initia...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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