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olga_2 [115]
3 years ago
8

If the European subsidiary of a U.S. firm has net exposed assets of euro​200,000, and the euro increases in value from ​$1.22/eu

ro to ​$1.26/euro the U.S. firm has a​ translation: A. loss of​ $8,000. B. gain of​ $8,000. C. loss of euro​252,000. D. gain of​ $252,000.
Business
1 answer:
larisa86 [58]3 years ago
5 0

Answer:

B. Gain $8,000

Explanation:

The calculation of exchange translation is shown below:-

Old exchange rate = Net exposed assets × Value of Euro

= 200,000 × ​$1.22

= $244,000

New value in euro = Net exposed assets × Increased exchange rate

= 200,000 × $1.26

= $252,000

Translation Profit  = New value in euro - Old exchange rate

= $252,000 - $244,000

= $8,000

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