Question

One foreign project in Hungary and another in Japan had the same perceived value from the U.S. parent's perspective. Then, the exchange rate expectations were revised, upward for the value of the Hungarian forint and downward for the Japanese yen. From the parent's perspective, the break-even salvage value for the project in Japan would now be which of the following? a. Negative. b. Negative AND lower than that for the Hungarian project. c. Lower than that for the Hungarian project. d. The same as that for the Hungarian project. e. Higher than that for the Hungarian project.

Answer 1

Answer:

higher than that for the Hungarian project

Explanation:

One foreign project in Hungary and another in Japan had the same perceived value from the U.S. parent's perspective. Then, the exchange rate expectations were revised, upward for the value of the Hungarian forint and downward for the Japanese yen. From the parent's perspective, the break-even salvage value for the project in Japan would now be higher than that for the Hungarian project.