Macrosoft is a U$.$S$.$ software company that sells only to U$.$S$.$ customers. It owns a subsidiary in Russia where it employs many programmers to develop its software. Office rents, salaries and taxes in Russia are all paid in Russian rubles.$$

Attempt $1/5$ for $10$ pts$.$

Part$1$

What would happen to the company's valuation if the ruble depreciated, i$.$e$.,$ a ruble would buy fewer dollars than before?

Its valuation would increase, since the subsidiary's profits would be more when converted to dollars.

Its valuation would decrease, since the subsidiary's development costs would increase when converted to dollars.

Its valuation would not be affected.

Its valuation would increase, since the subsidiary's development costs would decrease when converted to dollars.

Its valuation would decrease, since the subsidiary's profits would be less when converted to dollars.

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