One Foreign Project in Hungary and Another in Japan Had

question 33

Multiple Choice

One foreign project in Hungary and another in Japan had the same perceived value from the U.S. parent's perspective. Then, the exchange rate expectations were revised, upward for the value of the Hungarian forint and downward for the Japanese yen. The break-even salvage value for the project in Japan would now be ____ from the parent's perspective.

• A) negative
• B) higher than that for the Hungarian project
• C) lower than that for the Hungarian project
• D) the same as that for the Hungarian project
• E) A and C

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Definitions:

Marginally Profitable

Describes a business or investment that generates a slight profit above its break-even point.

Capital Gain

The profit earned from the sale of an asset when the selling price exceeds its purchase price.

Book Value

The net asset value of a company, calculated as total assets minus intangible assets (patents, goodwill) and liabilities.

Income Taxes

Taxes on an individual's or corporation's income imposed by the government.