Question

Dubas Co. is a U.S.-based MNC that has a subsidiary in Germany and another subsidiary in Greece. Both subsidiaries frequently remit their earnings back to the parent company. The German subsidiary generated a net outflow of €2,000,000 this year, while the Greek subsidiary generated a net inflow of €1,500,000. What is the net inflow or outflow as measured in U.S. dollars this year? The exchange rate for the euro is $1.05. Group of answer choices $525,000 outflow $3,675,000 outflow $210,000 outflow $525,000 inflow

Answer 1

Answer:

$525,000 outflow

Explanation:

The German subsidiary had a net ouflow of €2,000,000

The Greek subsidiary had a net inflow of €1,500,000.

In other words, the U.S-based multinational would record an outflow because the  net ouflow shown above is more than the net inflow.

Net ouflow=net ouflow-net inflow

Net ouflow= €2,000,000-€1,500,000.

net ouflow=€500,000.

Lastly, we convert the ouflow into dollars using the below exchange rate

€1=$1.05

€500,000 in dollars=€500,000*$1.05/1€

€500,000 in dollars=$525,000