Remit their earnings back to the parent company. The Spain subsidiary generated a net outflow of €5,000,000 this year, while the German subsidiary generated a net inflow of €4,500,000. What is the net inflow or outflow as measured in U. S. dollars this year? The exchange rate for the euro is $1.159.

Cash outflow of $579,500

Explanation:

Net cash flow is the sum of all cash inflow and outflows of the company. In this question the company has cash outflow from Spain and inflow from Germany.

As per given data

Cash flow from Spain subsidiary = €5,000,000 outflow

Cash flow from German subsidiary = €4,500,000 inflow

Net cash flow to parent company = - €5,000,000 + €4,500,000

Net cash flow to parent company = - €500,000

The currency is converted using the exchange rate of two currencies which is $1.159 per euro.

Net cash Flow in U.S. dollars = - €500,000 x  $1.159 per euro

Net cash Flow in U.S. dollars = - $579,500

The Spanish subsidiary generated a net outflow of Euro 5000000, which means that the outflow in dollar terms is : 5000000*1.159 = $5795000.

While the German subsidiary generated a net inflow of Euro 4500000, which means that the inflow in dollar terms is : 4500000*1.159 = 5215500.

Hence the total net inflow outflow for the year is,

Net Outflow = 5795000-5215500 = $579,500.

Hope this clear things up.

Thank You.

answer(d) encourage cooperation by improving the chances of mutually agreeable transactions;