Scenario: Verandas International
Verandas International is expanding its operations in North America. The Dutch company supplies products needed by restaurants with outdoor tables. Verandas International is a leader in this industry, but the company believes it must increase its geographic reach to maintain that position.
-Lars has read that the value of the U.S. dollar is expected to decline relative to the euro. Which of the following might be the most advantageous for Verandas International?
A) Borrowing from U.S. banks
B) Issuing equity in Germany
C) Locating venture capitol in the Netherlands
D) Borrowing from Dutch banks

Question

Quizplus · Accepted Answer

If the U.S. dollar is expected to decline relative to the euro, borrowing from U.S. banks would be advantageous because the company would repay the loans with a weaker dollar, effectively reducing the cost of borrowing.

Scenario: Verandas International Verandas International Is Expanding Its Operations in North America. the North