Konekopf Corporation has a division in Canada and another in France. The investment in the French assets was made when the exchange rate was $1.20 per euro. The average exchange rate for the year was $1.30 per euro. The exchange rate at the end of the fiscal year was $1.38 per euro. Income and investment for the two divisions are:
Required: 1. The required return for Konekopf is 10%. Calculate ROI and RI for the two divisions. For the French division, calculate these measures using both dollars and euros. Which division is doing better? 2. What are the advantages and disadvantages of translating the French division information from euros to dollars?
Canada France Investment in assets $3,490,000 2,400,000 euros Income for current year $ 383,900 266,400 euros