Question

subsidiary wants to raise $US 1 million by issuing a bond denominated in Pakistani rupees (PKR). The current exchange rate of the rupee is $.02. How many PKR does the MNC need to obtain the $US 1 million needed

Answer 1

50,000,000 PKR

Step-by-step explanation:

The amount needed in this case is the Pakistani rupees (PKR) equivalent of $US 1 million using the current exchange rate of $.02 to 1 Pakistani rupees (PKR) as computed thus:

Amount needed in Pakistani rupees (PKR)=funds required in USD/exchange rate

funds required in USD=$US 1 million

exchange rate= $.02/1 Pakistani rupees (PKR)

Amount needed in Pakistani rupees (PKR)=$1,000,000/ $.02

Amount needed in Pakistani rupees (PKR)=50,000,000 PKR