Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / 1) Suppose foreign local currency depreciation causes US parent company operating cash flow to decrease by $30,000

1) Suppose foreign local currency depreciation causes US parent company operating cash flow to decrease by $30,000

Finance

1) Suppose foreign local currency depreciation causes US parent company operating cash flow to decrease by $30,000. 

Old exchange rate: Local Currency 1 = $0.25

New exchange rate: Local Currency 1 = $0.2

Suppose the US parent company raises local currency-denominated debt before the exchange rate changes. The debt amount is 600,000 in local currency. 

How much is the dollar gain from debt repayment due to the depreciation of local currency?

Will this dollar gain completely offset the $30,000 dollar loss in operating cash flow?

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE