Should Wright continue operating the Russian subsidiary

Reference no: EM133249370

Question - Wright Inc. established a subsidiary in Russia two years ago. Under its original plans, Wright intended to operate the subsidiary for a total of four years. However, it would like to reassess the situation, since exchange rate forecasts for the Russian ruble indicate that it may depreciate from its current level of $.033 to $.028 next year and to $.025 in the following year. Wright could sell the subsidiary today for 5 million rubles to a potential acquirer. If Wright continues to operate the subsidiary, it will generate cash flows of 3 million rubles next year and 4 million rubles in the following year. These cash flows would be remitted back to the parent in the U.S. The required rate of return of the project is 16 percent. Should Wright continue operating the Russian subsidiary? Why?

Reference no: EM133249370

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