If the net baht received from the Thailand subsidiary are invested in Thailand, how will U.S. operations be affected?

If the net baht received from the Thailand subsidiary are invested in Thailand, how will U.S. operations be affected?

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January 1, 2022
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If the net baht received from the Thailand subsidiary are invested in Thailand, how will U.S. operations be affected?

Answer and ExplanationSolution by a verified expert

Here is a tip:
Exchange rates of currency affect the investment decisions in the foreign country.

Explanation
Company B of Country U needs funds to continue their operations. For these operations, Company B has two options. According to the first option, Company B's subsidiary can transfer the remitted funds to Company B in Country U. According to the second option, Company B's subsidiary can invest funds only in Country T at 15% interest to continue their operations.

Verified Answer
If the earnings, in baht, received from the subsidiary present in Country T is invested only in Country T, it will affect the operations of the company present in Country U. This is because it has to borrow funds for operations at an interest of 10%.

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