MLC Audio is a U.S.-based MNC that has subsidiaries in three European countries.

Question

MLC Audio is a U.S.-based MNC that has subsidiaries in three European countries. The subsidiaries frequently remit their earnings back to the parent company. This year, the Portuguese subsidiary generated a net outflow of €2,000,000, the Spanish subsidiary generated a net inflow of €2,500,000, and the Italian subsidiary generated a net inflow of €500,000. Calculate the net inflow or outflow as measured in U.S. dollars this year. The exchange rate for the euro is $1.31. Show how you derive your answer.

Explanation / Answer

Net inflow = $ (- 2,000,000 + 2,500,000 + 500,000) * 1.31

= $1,310,000

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