Question

A U.S. firm is expecting to pay cash flows of 30 million Egyptian pounds and 45 million Qatar rials. The current spot exchange rates are: $1 = 5.735 pounds and $1 = 3.644 rials. Assume these cash flows are delayed one year and the expected spot rates at that time will be $1 = 5.902 pounds and $1 = 3.993 rials.

What is the difference in dollars paid that was caused by the delay?

Answer 1

Calculation of the difference in dollars paid that was caused by the delay
Cash flows in dollars at current spot rate
- 30,000,000 Egyptian pounds / 5.735 pounds per USD	$5,231,037.49
- 45,000,000 Qatar Rials / 3.644 rials per USD	$12,349,066.96
Cash flows in dollars at current spot rate		$17,580,104.45
Cash flows in dollars at expected spot rate
- 30,000,000 Egyptian pounds / 5.902 pounds per USD	$5,083,022.70
- 45,000,000 Qatar Rials / 3.993 rials per USD	$11,269,722.01
Cash flows in dollars at expected spot rate		$16,352,744.72
Difference in dollars paid that was caused by the delay		$1,227,359.73