In 1995,Ajax Manufacturing's German Subsidiary Has the Following Balance Sheet

question 5

Multiple Choice

In 1995,Ajax Manufacturing's German subsidiary has the following balance sheet:
Suppose the DM appreciates from $0.70 to $0.76 during the period.
-Under the temporal method,what is Ajax's translation gain loss.?

• A)a gain of $294,000
• B)a gain of $192,000
• C)a loss of $174,000
• D)a loss of $12,000

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Definitions:

Term Deposit

A fixed-term investment held at a financial institution that pays interest at a specified rate and matures on a specific date.

Scotiabank

A Canadian multinational banking and financial services company, one of the largest in Canada in terms of deposits and market capitalization.

Annual Rate

The interest rate for a period of one year, often used for comparing the annual interest of financial products.

Discount Rate

The interest rate charged by central banks on loans to commercial banks or the rate used in discounted cash flow analysis to determine present value.