If a U.S. recession occurred without any change in interest rates, identify the part of the MNC valuation equation that would likely be most affected. subsidiary there. The wholly owned subsidiary was created to improve new products that Melnick can sell in the United States (denominated in dollars) to U.S. customers. The subsidiary pays its local employees in baht (the Thai currency). The subsidiary has a small amount of sales denominated in baht, but its expenses are much larger than its revenue. Melnick has just obtained a large baht-denominated loan that will be used to expand its subsidiary. The business that the parent company conducts in the United States is not exposed to exchange rate risk. If the Thai baht weakens over the next 3 years, will the value of Melnick Co. be favorably affected, unfavorably affected, or unaffected? Briefly explain.
