33. Estimating an MNC's Cash Flows. Biloxi Co. is a U.S. firm with a subsidiary in China.

The
subsidiary reinvests half of its net cash flows into operations and remits half to the parent.
Biloxi Co. has expected cash flows of $10,000,000 from domestic business and the Chinese
subsidiary is expected to generate 100 million Chinese yuan at the end of the year. The
expected value of yuan at the end of the year is $.13. What are the expected dollar cash flows
of the parent of Biloxi Co. in one year?
ANSWER
[$10,000,000 + 100,000,000]/2[$.13] = 16,500,000.