Local currency is us dollar and foreign currency is euro dollar

Local currency is US dollar and foreign currency is EURO dollar

Exposure to local currency appreciation:
Local sales (in the firm’s home country) are expected to decrease if the home currency appreciates because the firm will face increased foreign competition. Local customers will be able to obtain foreign products cheaply with their strengthened currency. That is, local customers will be able to obtain foreign substitute products cheaply with their strengthened currency. Cash inflow form exports denominated in the local currency will also likely be reduced as a result of appreciation in that currency because foreign importers will need more of their own currency to pay for these products. With regard to the firm’s cash outflow, the cost of imported supplies denominated in local currency will not be directly affected by changes in exchange rate. If the local currency appreciates, however, then the cost of imported supplies denominated in the foreign currencies will be reduced if the local currency appreciates because the strengthened local currency will be exchanged for the foreign currency to make the interest payment. Thus, appreciation in the firm’s local currency cause a reduction in both cash inflow and outflow. The impact on a firm’s net cash flows will depend on which transaction type, outflow or inflow, is more affected by the appreciation. For example, the firm is in the exporting business but obtains its supplies and borrows funds locally, then the value of its inflow transaction will be reduced to a greater extent than will the value of its outflow transactions. In this case, net cash flows will be reduced. Conversely, cash inflows of firm concentrating its sales locally with little foreign competition will not be severely reduced by appreciation of the local currency. If such a firm obtains supplies and borrows fund overseas, its outflow will be reduced. Overall, this firm’s net cash flow will be enhanced by the appreciation of its local currency. 

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 15% with the discount code GRADUATE