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Changing prices World Electronics Inc. invested $16,000,000 (o build a plant in a foreign country. The labor and materials used in production are purchased locally. The plant expansion was estimatedto produce an internal rate of return of 20% in U.S. dollar terms. Due to a currency crisis, flie currency exchange rate between the local currency and the U.S. dollar doubled fromtwo local units per U.S. dollar to four local units per U.S. dollar. Asssume that the plant produced and sold product in the local economy. Explain what impact thi5 change in the currency exchange rate would have on the projects internal rateof return.

BuyFind

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883
BuyFind

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883

Solutions

Chapter
Section
Chapter 15, Problem 15.3.1C
Textbook Problem

Changing prices

World Electronics Inc. invested $16,000,000 (o build a plant in a foreign country. The labor
and materials used in production are purchased locally. The plant expansion was estimatedto produce an internal rate of return of 20% in U.S. dollar terms. Due to a currency crisis, flie currency exchange rate between the local currency and the U.S. dollar doubled fromtwo local units per U.S. dollar to four local units per U.S. dollar.
Asssume that the plant produced and sold product in the local economy. Explain what impact thi5 change in the currency exchange rate would have on the projects internal rateof return.

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Chapter 15 Solutions

Survey of Accounting (Accounting I)
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