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 €10,500,000 this year, while the Greek subsidiary generated a net inflow of €11,500,000. What is the net inflow or outflow as measured in U.S. dollars this year? The exchange rate for the euro is $1.12.

Answer 1

The net is an inflow equivalent to $1,120,000

Step-by-step explanation:

Net inflow or outflow is the result from the addition of the results from the subsidiaries in Germany and Greece

Net Inflow/(Outflow) = (-10,500,000) + (11,500,000)

where the outflow is negative and inflow is positive

Net Inflow/(Outflow) = €1,000,000

This is a net positive position ( Net inflow)

Considering the exchange rate given,

€1 = $1.12

Therefore,

€1,000,000 would be equivalent to

= 1,000,000 × 1.12

= $1,120,000 (net inflow)