Question

Livingston Co. has a subsidiary in Korea. The subsidiary reinvests half of its net cash flows into operations and remits half to the parent. Livingston's expected cash flows from domestic business are $100,000 and the Korean subsidiary is expected to generate 100 million Korean won at the end of the year. The expected value of won is $.0012. What are the expected dollar cash flows of Livingston Co.? Group of answer choices $100,000 $160,000 $200,000 $60,000

Answer 1

Answer:

$160,000

Explanation:

The computation of the expected dollar cash flows is given below:

Cash Flow arise from the domestic business is

= $100,000

And,

Cash flow from korean subsidiary is

= 50% × (100,000,000 × $0.0012)

= $60,000

Total Expected Cash Flows is

= $100,000 + $60,000

= $160,000