INTERNATIONAL CORPORATE FINANCE

Teck systems Inc., a Texas-based manufacturer of computer equipment, is considering the establishment of a manufacturing plant in Zana, a small West African country with a population of about 29.6 million. The country's currency is the Cedi and it is traded against most foreign currencies including the U.S. dollar. The exchange rate between the Cedi and the U.S. dollar is quoted in the forex market as:

U.S. $1 = ZC5.50

The financial team of Teck Systems Inc. has gathered that Zana is a democratic country with stable economic, social, and political environments. Although, the value of the Cedi in the foreign exchange market has remained stable for the past three years, next year's projection depicts an unfavorable economic situation because of the Covid-19 pandemic and its adverse effect on emerging economies. A quick internet research on Zana shows that the projected budget deficits, interest rate, inflation, and trade deficits may deteriorate and cause a gradual depreciation of the Cedi against the U.S. dollar. Inflation is expected to increase from 6% to 9%, unemployment rate is expected to increase as well. The increase in unemployment rate is likely to lead to political unrests and less demand for goods and services. The results of thegoogle search on Zanaare shown below: