i need help in below mentioned q
The Baker Company, a U.S. corporation headquartered in California, has a manufacturing affiliate in Mexico. Baker wants to expand the capability of this plant. The plant is very profitable and generates a substantial positive cash flow. Approximately $1,000,000 (U.S.) is available to be paid in dividends to the U.S. parent from the Mexican affiliate. In addition, another affiliate, located in Brazil, has $750,000 (U.S.) available to be paid in dividends.
Which one of the following would be the
best way to finance a $500,000 investment in the Mexican facility?
a. Have the parent transfer funds for the $500,000 investment.
b. Have Brazil transfer the $500,000.
c. Have the parent transfer $250,000, and Brazil transfer $250,000.
d. Have the Mexican facility reduce its dividends to the U.S. parent by the $500,000.
correct ans : c
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Mariam Adnan
Accountant
Manama
Bahrain
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