Explain how the present value of the salvage value of an Indonesian subsidiary will be affected (from the U.S. parent’s perspective) by (a) an increase in the risk of the foreign subsidiary and (b) an expectation that Indonesia’s currency (rupiah) will depreciate against the dollar over time.
Explain how the present value of the salvage value of an Indonesian subsidiary will be affected (from the U.S. parent’s perspective) by (a) an increase in the risk of the foreign subsidiary and (b) an expectation that Indonesia’s currency (rupiah) will depreciate against the dollar over time.
ChapterA6: Appendix 6: Government Intervention During The Asian Crisis
Section: Chapter Questions
Problem 13DQ
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Explain how the present value of the salvage value of an Indonesian subsidiary will be affected (from the U.S. parent’s perspective) by (a) an increase in the risk of the foreign subsidiary and (b) an expectation that Indonesia’s currency (rupiah) will depreciate against the dollar over time.
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