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.

Question

Quizplus · Accepted Answer

To obtain $1 million, the U.S.-based subsidiary will need to convert $1 million to PKR. At an exchange rate of $.02 per rupee, the calculation would be as follows:

$1,000,000 / $.02 per rupee = 50,000,000 rupees. Therefore, the MNC needs 50,000,000 rupees to obtain the $1 million needed.