One foreign project in Hungary and another in Japan had the same perceived value from the U.S. parent's perspective. Then, the exchange rate expectations were revised, upward for the value of the Hungarian forint and downward for the Japanese yen. The break-even salvage value for the project in Japan would now be ____ from the parent's perspective.

Question

Quizplus · Accepted Answer

The upward revision of the Hungarian forint's value increases the expected returns from the Hungarian project, while the downward revision of the Japanese yen's value decreases the expected returns from the Japanese project. Therefore, the break-even salvage value for the Japanese project must be higher to compensate for the lower expected returns.

One Foreign Project in Hungary and Another in Japan Had