Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.2855 S$/US$. You have just placed an order for 24,000 motherboards at a cost to you of 231.00 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $194 each. NOT EXCEL |
|
|
|
|
|
a) Profit on current exchange rate
24000*(194 - 231.00/1.2855) = 343281.21
b) If exchange rate goes up 10%, then new exchange rate =
1.2855*1.1 = 1.41405
Profit on current exchange rate
24000*(194 - 231.00/1.41405) = 735346.56
c) If exchange rate goes down 10%, then new exchange rate =
1.2855*0.9 = 1.15695
Profit on current exchange rate
24000*(194 - 231.00/1.15695) = -135909.76
d) Breakeven rate
24000*(194 - 231.00/r) = 0
r = 231/194 = 1.190722
e) Fall % = (1.2855 - 1.1907)/1.2855 = 7.375%
Get Answers For Free
Most questions answered within 1 hours.