Explicate the reasons a) a currency depreciation decreases the profitability of a foreign investment (NPV), if the
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Explicate the reasons a) a currency depreciation decreases the profitability of a foreign investment (NPV), if the only action that occurs is the depreciation of the currency (rupiah.) This is exemplified by the case of the Semen investment in Indonesia.
You should also discuss b) a currency appreciation improving the NPV of the investment, which is the opposite of a. Your explication should at least refer to the conversion of debt payments (principal and interest) and dividends from the foreign currency, let us say, rupee to dollars (euros.). Everything else presuppose remains constant (ceteris paribus.)
Please Answer in 500 words.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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