A US-Based MNC Has Just Established a Subsidiary in Algeria

question 62

Multiple Choice

A U.S.-based MNC has just established a subsidiary in Algeria. Shortly after the plant was built, the MNC determines that its exchange rate forecasts, which had previously indicated a slight appreciation in the Algerian dinar, were probably false. Instead of a slight appreciation, the MNC now expects that the dinar will depreciate substantially due to political turmoil in Algeria. This new development would likely cause the MNC to ____ its estimate of the previously computed net present value.

• A) lower
• B) increase
• C) lower, but not necessarily if the MNC invests enough in Algeria to offset the decrease in NPV
• D) increase, but not necessarily if the MNC reduces its investment in Algeria by an offsetting amount
• E) none of the above

---

Definitions:

Northwestern Land Claims

Territorial disputes and claims in the Northwestern territories of the United States, primarily during the late 18th and early 19th centuries, involving land rights and settlement.

Northwest Ordinance

A 1787 federal law that created a method for admitting new states to the Union from the territory, and listed rights and freedoms.

Land Ordinance

A reference to the Land Ordinance of 1785, a law aimed at orderly settlement and division of territory into townships in the United States.

Land Ordinance

Legislation passed by Congress under the Articles of Confederation that established a systematic and orderly process for surveying, selling, and settling lands in the western territories.