Question
Woolsey Corporation, based in Wichita, has a subsidiary in Thailand that produces airplane components. The subsidiary sells the components to airplane manufacturers in the U.S.
Woolsey Corporation, based in Wichita, has a subsidiary in Thailand that produces airplane components. The subsidiary sells the components to airplane manufacturers in the U.S. The components are invoiced in U.S. dollars. Woolsey Corporation pays employees of the subsidiary in Thai baht and makes a large monthly lease payment in Thai baht. The parent financed the investment in the Thai subsidiary by borrowing dollars from a bank in Kansas. Woolsey has no other international business.
a. (6 points) Given the conditions, is Woolsey Corporation affected favorably or unfavorably (or not affected) by depreciation of the Thai baht? Briefly explain.
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