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Olmsted Co$.$ has small computer chips assembled in Poland and transports the final assembled products to the parent, where they are sold by the parent in the United States.

The assembled products are invoiced in dollars. Olmsted Co$.$uses Polish currency $($the zloty$)$ to produce these chips and assemble them in Poland. The Polish subsidiary pays

the employees in the local currency $($zloty$),$ and Olmsted Co$.$ finances its subsidiary operations with loans from a Polish bank $($in zloty$).$ The parent of Olmsted will send

sufficient monthly payments $($in dollars$)$ to the subsidiary in order to repay the loan and other expenses incurred by the subsidiary. If the Polish zloty depreciates against the

dollar over time, will that have a favorable, unfavorable, or neutral effect on the value of Olmsted Co$.?$ Briefly explain.

It will have

effect because Olmsted incurs expenses in the zloty and it will be able to cover these expenses with

dollars if the zloty

depreciates. It will be able to repay the zloty loan with

$-$Select$-$

dollars if the zloty depreciates.