Subsidiary A of Mega plc has net inflows in Australian dollars of A$1,000,000, while Subsidiary B has net outflows in Australian dollars of A$1,500,000. The expected exchange rate of the Australian dollar is £0.30. What is the net inflow or outflow as measured in pounds?

Question

Quizplus · Accepted Answer

Subsidiary A has an inflow of A$1,000,000, which converts to £300,000 (A$1,000,000 * £0.30). Subsidiary B has an outflow of A$1,500,000, which converts to £450,000 (A$1,500,000 * £0.30). The net effect is an outflow of £150,000 (£300,000 - £450,000).

Subsidiary a of Mega Plc Has Net Inflows in Australian