A U.S. firm has total assets valued at €827,000 located in Germany. This valuation did not change from last year. Last year, the exchange rate was €.9473/$. Today, the exchange rate is €.8997/$. By what amount did these assets change in value on the firm's U.S. financial statements? Multiple Choice −$46,187.79 −$39,365.20 $39,365.20 $46,187.79 $0
A U.S. firm has total assets valued at €827,000 located in Germany. This valuation did not change from last year. Last year, the exchange rate was €.9473/$. Today, the exchange rate is €.8997/$. By what amount did these assets change in value on the firm's U.S. financial statements? Multiple Choice −$46,187.79 −$39,365.20 $39,365.20 $46,187.79 $0
Chapter10: Measuring Exposure To Exchange Rate Fluctuations
Section: Chapter Questions
Problem 22QA
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Question
A U.S. firm has total assets valued at €827,000 located in Germany. This valuation did not change from last year. Last year, the exchange rate was €.9473/$. Today, the exchange rate is €.8997/$. By what amount did these assets change in value on the firm's U.S. financial statements?
Multiple Choice
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−$46,187.79
-
−$39,365.20
-
$39,365.20
-
$46,187.79
-
$0
Expert Solution
Step 1
The change in value of assets is determined by deducting the last year value of assets from value of assets of this year. If value of asset this year is more than last year, there is increase in the value and if value of asset this year is less than last year, there is decrease in the value.
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