Wagner Co., a U.S. firm, pursued a 6-year project in Russia. It purchased a manufacturing plant from the Russian government 6 years ago for 500 million rubles. Since the ruble was worth $.16 at the time of the investment, Wagner needed $80 million to purchase the plant. The Russian government guaranteed that it would repurchase the plant for 500 million rubles in 6 years when the project was completed. At that time, however, the ruble was worth only $.034, so Wagner received only $17 million (computed as 500 million x $.034) from selling the plant. Even though the price of the plant in rubles at the time of the sale was the same as the price at the time of the purchase, the sales price of the plant in dollars at the time of the sale was about 79 percent less than the purchase price.

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This means that the value of the ruble decreased significantly over the 6year period of Wagners project in Russia When Wagner purchased the plant the ... View the full answer