Question

Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.5130 S$/US$. You have just placed an order for 31,000 motherboards at a cost to you of 230.80 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $161 each.

a. Calculate your profit if the exchange rate falls by 11 percent over the next 90 days. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Profit    _____    $ ?

b. What percentage decrease does this represent in terms of the Singapore dollar versus the U.S. dollar? (Enter your answer as a positive value. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Percentage decrease ____ % ?

I completed all other parts- if needed for question let me know

Answer 1

Solution :

A). Given:

No. Of motherboard to be purchased = 31000

Exchange rate is : 1.5130S$/ US $

Cost of one motherboard in S$= 230.80$

Cost of one motherboard in US $= 230.80/1.5130=152.54 US$

Selling price of one motherboard in US $= 161$

Profit= S. P. - C. P. = 161-152.54 = 8.46 $

now, fall of 11% in exchange rate will result in new exchange rate which is = 1.5130- (1.5130*11%) = 1.34657

So now exchange rate is 1.34657 S$/ US$

Based on this new exchange rate,

Cost of one motherboard = 230.80/1.34657= 171.39

Profit / loss = s. P - C. P= 161- 171.39 = ( 10.39)$

B). Percentage decrease = 8.46/(10.39+8.46)*100= 44%