Question

Microsoft projects cash flows as follows for the next year:

Currency	Total Inflow	Total Outflow	Current Exchange Rate in U.S. Dollars
British pound (£)	£2,104,000	£963,900	£1.29

What is Microsoft’s the net exposure of British pound (£) in U.S. dollars?

Group of answer choices

$1,644,790.35

$1,204,221.50

$1468562.81

$1,483,248.44

$1,116,107.74

Answer 1

The Current Exchange Rate in U.S. Dollars is given as pound 1.29 where as it should be $1.29 since the heading says current exchange Rate in U.S. Dollars

Net Exposure in Pounds = Total Inflows - Total outflows

Net Exposure in Pounds = £2,104,000 - £963,900

Net Exposure in Pounds = 1140100

To calculate the net exposure in USD, we need to counvert the value of Pounds to USD

if 1 pound = USD 1.29 then 1140100 pounds = 1140100 x 1.29 = USD 14,70,729

So the USD exposure is USD 14,70,729

Answer is not there in the choices provided. USD 14,70,729 is the correct answer.