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The current Covid-19 crisis will impact the valuation of MNCs. The value of a multinational firm...

The current Covid-19 crisis will impact the valuation of MNCs. The value of a multinational firm should increase if the current Covid-19 crisis causes the expected cashflows from international operations to ____ and when foreign currencies denominating these cashflows are expected to ____. A. decrease; appreciate B. decrease; depreciate C. increase; appreciate D. increase; depreciate E. none of the options

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Answer #1

C. increase; appreciate

The current Covid-19 crisis will impact the valuation of MNCs. The value of a multinational firm should increase if the current Covid-19 crisis causes the expected cashflows from international operations to increase and when foreign currencies denominating these cashflows are expected to appreciate.
First of all, increasing cashflows from international operations are always beneficial. Now, if the foreign currency appreciates, it will result in more amount of local currency after conversion which is also beneficial.

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