Question

An Australian exporter has received goods from India and will pay 2 million Indian rupees (INR)...

An Australian exporter has received goods from India and will pay 2 million Indian rupees (INR) in one year. The exporter expects that the value of the INR will appreciate by 24.05% against the Australian dollar from today’s spot rate of 0.2607 in one year. How much Australian dollar the exporter will make a profit in percentage (%) due to appreciation of INR after one year? (enter 2 decimal places number with no sign or symbol)

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Today's spot rate = 0.2607 AUD/INR

Expected spot rate = 0.2607 * (1 + 0.2405)

Expected spot rate = 0.32339835 AUD/INR

Profit = (Today's spot rate - Expected spot rate) * Amount to pay in INR

Profit = (0.2607 - 0.32339835) * 2,000,000

Profit = -0.06269835 * 2,000,000

Profit = -125,396.7

Or a loss of AUD 125,396.7

The exporter will make a loss of AUD 125,396.7

Loss in percentage = Loss in AUD/(Today's spot rate * Amount to pay in INR)

Loss in percentage = 125,396.7/(0.2607 * 2,000,000)

Loss in percentage = 125,396.7/521,400

Loss in percentage = 0.2405

Loss in percentage = 24.05%

Answer: 24.05

Can you please upvote? Thank You :-)

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
An Australian exporter has supplied goods to India and will receive 2 million Indian rupees (INR)...
An Australian exporter has supplied goods to India and will receive 2 million Indian rupees (INR) in one year. The exporter expects that the value of the INR will depreciate by 22.41% against the Australian dollar from today’s spot rate of 0.2735 in one year. How much Australian dollar the exporter will make a loss in percentage (%) due to depreciation of INR after one year? (enter 2 decimal places number with no sign or symbol)
Perth International Co., an Australian multinational company, forecasts 68 million Australian dollars (A$) earnings next year...
Perth International Co., an Australian multinational company, forecasts 68 million Australian dollars (A$) earnings next year (i.e., year-one). It expects 58 million Chinese yuan (CNY), 42 million Indian rupees (INR) and 40 million Malaysian ringgit (MYR) proceeds of its three subsidiaries in year-one. It also forecasts the year-one exchange rates A$0.3568/CNY, A$0.0413/INR and A$0.6574/MYR. Calculate the total Australian dollar (A$) cash flow for year-one. (enter the whole number with no sign or symbol)
Perth International Co., an Australian multinational company, forecasts 69 million Australian dollars (A$) earnings next year...
Perth International Co., an Australian multinational company, forecasts 69 million Australian dollars (A$) earnings next year (i.e., year-one). It expects 57 million Chinese yuan (CNY), 44 million Indian rupees (INR) and 36 million Malaysian ringgit (MYR) proceeds of its three subsidiaries in year-one. It also forecasts the year-one exchange rates A$0.3590/CNY, A$0.0383/INR and A$0.6234/MYR. Calculate the total Australian dollar (A$) cash flow for year-one. (enter the whole number with no sign or symbol)
Q1. Perth International Co., an Australian multinational company, forecasts 66 million Australian dollars (A$) earnings next...
Q1. Perth International Co., an Australian multinational company, forecasts 66 million Australian dollars (A$) earnings next year (i.e., year-one). It expects 56 million Chinese yuan (CNY), 42 million Indian rupees (INR) and 33 million Malaysian ringgit (MYR) proceeds of its three subsidiaries in year-one. It also forecasts the year-one exchange rates A$0.2543/CNY, A$0.0420/INR and A$0.6944/MYR. Calculate the total Australian dollar (A$) cash flow for year-one. (enter the whole number with no sign or symbol) Ans: 104,920,000 Q2: Perth International anticipates...
The multinational company Ozi Ltd. anticipates 44 million Australian dollars (A$) incomes from the local business...
The multinational company Ozi Ltd. anticipates 44 million Australian dollars (A$) incomes from the local business next year. It forecasts next year 81 million Japanese yen (YEN), 54 million Indian rupee (INR) and 31 million Malaysian ringgit (MYR) earnings of its subsidiaries in Japan, Indian and Malaysia, respectively. The subsidiaries remit 52 per cent of their proceeds to the Australian parent. Calculate the total A$ cash flow if Ozi expects the next year value of YEN, INR and MYR are...
Amara Patel Part​ 1:  Amara Patel has saved​ 1,000,000 Indian Rupees​ (INR) to invest in the...
Amara Patel Part​ 1:  Amara Patel has saved​ 1,000,000 Indian Rupees​ (INR) to invest in the U.S. stock market. Amara has decided to invest all of her savings in shares of Fabulous Machine​ Company, a​ dividend-paying U.S. manufacturing corporation. She can purchase shares at a price of​ $27.44 per share. The current spot rate is​ $0.013876 USD per INR.   If Amara converts her​ 1,000,000 INR to USD at the current spot rate of​ $0.013876 USD per​ INR, and uses the...
Kelvin just purchased £15.2 million goods from a British exporter on credit due 90 days from...
Kelvin just purchased £15.2 million goods from a British exporter on credit due 90 days from today. The spot exchange rate is $1.21/£. The 90-day interest rates in the U.S. and the UK are 1 and 1.5 percent respectively. The 90-day forward rate on the pound is $1.2090/£. A 3-month call at strike price of $1.20/£ can be purchased at a premium of $0.016. A 3-month put option at strike price of $1.20/£ can be purchased at a premium of...
Late in 2018, Felix Machine Company (FMC) management was considering expansion of the company’s international business...
Late in 2018, Felix Machine Company (FMC) management was considering expansion of the company’s international business activities. FMC is a South Carolina–based manufacturer of compound machines for use in industrial equipment. FMC’s worldwide market was supplied from subsidiaries in France, Brazil, and Taiwan, as well as from the United States. The company was particularly successful in Asia, mainly due to the high quality of its products, its technical expertise, and excellent after-sale service. This success led corporate management to consider...
Rizzo Company (RC) has GBP 1 million receivables due in one year. While the current spot...
Rizzo Company (RC) has GBP 1 million receivables due in one year. While the current spot price of GBP is USD 1.31, RC expects the future spot rate of British pound to fall to approximately $1.25 in a year so it decides to avoid exchange rate risk by hedging these receivables. The strike price of American-style put options are $1.29. The premium on the put options is $.02 per unit. Assume there are no other transaction costs. Finally, there is...
Sarah has $2,500 that she wants to invest in a European certificate of deposit (CD). The...
Sarah has $2,500 that she wants to invest in a European certificate of deposit (CD). The spot exchange rate (dollars per euro) ise$/€=1.13 If the minimum investment required in the CD is €2,000, does Sarah have sufficient funds? If not, what is the shortfall (in Euros)? If so, how much surplus does Sarah have (in euros)? NOTE: This is not a multiple-choice problem. Show your work to receive credit for the problem. Suppose the euro/Australian dollar exchange rate increases from...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT