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Calculate roi and ri for the two divisions

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Reference no: EM132746473

Budi Company has a division in the United States, and another in France. The investment in the French assets was made with the exchange rate was $1.3 per euro. The average exchange rate for the year was $1.4 per euro. The exchange rate at the end of the fiscal year was $1.45 per euro. Income and investment for the two divisions are as follows :

Investment in assets US $5.450.000, France 3.800.000 euro
Income for current year US $681.250, France 486.400 euro

Problem 1. The required rate of return for Budi is 12%. Calculate ROI and RI for the two divisions. For the French division, calculate these measures using both dollars and euro. Which division is doing better?

Problem 2. What are the advantages and disadvantages of translating the French Division information from euro to dollars?

Reference no: EM132746473

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