Question

Assume a U.S.-based subsidiary wants to raise $1 million by issuing a bond denominated in Pakistani rupees (PKR). The current exchange rate of the rupee is $.02. Thus, the MNC needs ____ rupees to obtain the $1 million needed.​

a. ​1,000,000
b. ​none of the above
c. ​20,000
d. ​50,000,000

Answer 1

option (d) 50,000,000

Step-by-step explanation:

Data provided in the question:

Amount of money for which bonds to be issued = $1 million = $100,000

The current exchange rate of the rupee = $.02

i.e 1 rupee = $0.02

Now,

The amount MNC needs in Rupees will be

= (Amount of bonds required in Dollar ) ÷ ( Current exchange rate )

= $100,000 ÷ $0.02 per rupees

= 50,000,000 Rupees

Hence,

The answer is option (d) 50,000,000