Question: A US multinational corporation has operations in Bolivia through which it plans to sell a new product of 500,000 cans of beans per year for

A US multinational corporation has operations in Bolivia through which it plans to sell a new product of 500,000 cans of beans per year for the next 3 years, at a price of BOB 4 per can after incurring a variable cost of BOB 2.50 per can. The company will also incur a fixed cost of BOB 120,000 per year. The company has invested BOB 900,000 today in manufacturing equipment for its Bolivian operations, which will be depreciated to $0 at the end of its 3-year life. The corporations required rate of return is 20% and has a tax rate of 25%. The spot rate was BOB 6.91/$ before it unexpectedly changed to BOB 7.25/$.

What is the impact on the value of the Bolivian operations if the US multinational decided to increase the domestic price to BOB 4.90, which will likely cause a decline in the number of units sold by 75,000?

Group of answer choices

US$78,623 decrease

US$202,500 increase

US$51,009 increase

US$266,529 increase

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