Arlington Co. expects to receive 10 million euros in each of the next 10 years. It will

Question:

Arlington Co. expects to receive 10 million euros in each of the next 10 years. It will need to obtain 2 million Mexican pesos in each of the next 10 years. The euro is presently valued at $1.38 and is expected to depreciate by 2 percent each year. The peso is valued at $.13 and is expected to depreciate by 2 percent each year. Review the valuation equation for an MNC. Do you think that the movements will have a favorable or unfavorable effect on the MNC?
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...