White Rock Inc.located in British Columbia makes moccasins marketed mostly to tourists.The firm would like to take advantage of lower labour costs in Turkey and is considering the establishment of a foreign operation in Turkey.The current exchange rate is Lira 1,000,000/C$.Management predicts the following for the next two years for the Turkish subsidiary: $$\begin{array} { l c l }
& \text { Year 1 } & \text { Year 2 } \
& & \
\text { Revenues (billions of lira) } & 7,000 & 8,000 \
\text { Inflation in Canada: } & 0 \% & 3 \% \
\text { Inflation in Turkey: } & 15 \% & 20 \%
\end{array}$$ All cash flows are in current liras.Determine the Canadian dollar revenues for the next two years.

Question

White Rock Inc.located in British Columbia makes moccasins marketed mostly to tourists.The firm would like to take advantage of lower labour costs in Turkey and is considering the establishment of a foreign operation in Turkey.The current exchange rate is Lira 1,000,000/C$.Management predicts the following for the next two years for the Turkish subsidiary: $$\begin{array} { l c l } 
& \text { Year 1 } & \text { Year 2 } \
& & \
\text { Revenues (billions of lira) } & 7,000 & 8,000 \
\text { Inflation in Canada: } & 0 \% & 3 \% \
\text { Inflation in Turkey: } & 15 \% & 20 \%
\end{array}$$ All cash flows are in current liras.Determine the Canadian dollar revenues for the next two years.

Quizplus · Accepted Answer

The Answer of White Rock Inc.located in British Columbia makes moccasins marketed mostly to tourists.The firm would like to take advantage of lower labour costs in Turkey and is considering the establishment of a foreign operation in Turkey.The current exchange rate is Lira 1,000,000/C$.Management predicts the following for the next two years for the Turkish subsidiary: $$\begin{array} { l c l } 
& \text { Year 1 } & \text { Year 2 } \
& & \
\text { Revenues (billions of lira) } & 7,000 & 8,000 \
\text { Inflation in Canada: } & 0 \% & 3 \% \
\text { Inflation in Turkey: } & 15 \% & 20 \%
\end{array}$$ All cash flows are in current liras.Determine the Canadian dollar revenues for the next two years.

White Rock Inc All Cash Flows Are in Current Liras