Explain how the present value of the salvage value of an American subsidiary will be affected (from the Philippine's parent’s perspective) by (a) an increase in the risk of the foreign subsidiary and (b) an expectation that US’s currency (dollar) will depreciate against the dollar over time.

Explain how the present value of the salvage value of an American subsidiary will be affected (from the Philippine's parent’s perspective) by (a) an increase in the risk of the foreign subsidiary and (b) an expectation that US’s currency (dollar) will depreciate against the dollar over time.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

ChapterA6: Appendix 6: Government Intervention During The Asian Crisis

Section: Chapter Questions

Problem 13DQ

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Concept explainers

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.

Question

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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