Question

"Dubas Co. is a U.S.-based MNC that has a subsidiary in Germany and another subsidiary in Austria. 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 Austrian 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"

Answer 1

$525,000

Step-by-step explanation:

The computation of the net inflow or outflow is shown below:

= Total outflow - total inflow

where,

Total outflow = ∈2,000,000 × $1.05 = $2,100,000

Total inflow = ∈1,500,000 × $1.05 = $1,575,000

Now put these values to the above formula

So, the value would equal to

= $2,100,000 - $1,575,000

= $525,000

This amount shows a net outflow as total outflow is greater than the total inflow.