Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.2861 S$/US$. You have just placed an order for 28,000 motherboards at a cost to you of 232.00 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $195 each. a. What is your profit at the current exchange rate? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is your profit if the exchange rate goes up by 10 percent over the next 90 days? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is your profit if the exchange rate goes down by 10 percent over the next 90 days? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the break-even exchange rate? (Round your answer to 4 decimal places, e.g., 32.1616.) e. What percentage rise or fall does this represent in terms of the Singapore dollar versus the U.S. dollar? (Input the value as a positive number. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Profit at current exchange rate b. Profit if the exchange rate increases 10 percent c. Profit if the exchange rate decreases 10 percent d. Break-even exchange rate S$ e. Percentage change % /$
Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.2861 S$/US$. You have just placed an order for 28,000 motherboards at a cost to you of 232.00 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $195 each. a. What is your profit at the current exchange rate? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is your profit if the exchange rate goes up by 10 percent over the next 90 days? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is your profit if the exchange rate goes down by 10 percent over the next 90 days? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the break-even exchange rate? (Round your answer to 4 decimal places, e.g., 32.1616.) e. What percentage rise or fall does this represent in terms of the Singapore dollar versus the U.S. dollar? (Input the value as a positive number. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Profit at current exchange rate b. Profit if the exchange rate increases 10 percent c. Profit if the exchange rate decreases 10 percent d. Break-even exchange rate S$ e. Percentage change % /$
Chapter7: International Arbitrage And Interest Rate Parity
Section: Chapter Questions
Problem 51QA
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Question
Q 3 chap 21
Transcribed Image Text:Suppose your company imports computer motherboards from Singapore. The exchange
rate is currently 1.2861 S$/US$. You have just placed an order for 28,000 motherboards
at a cost to you of 232.00 Singapore dollars each. You will pay for the shipment when it
arrives in 90 days. You can sell the motherboards for $195 each.
a. What is your profit at the current exchange rate? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is your profit if the exchange rate goes up by 10 percent over the next 90 days?
(Do not round intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
c. What is your profit if the exchange rate goes down by 10 percent over the next 90
days? (A negative answer should be indicated by a minus sign. Do not round
intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
d. What is the break-even exchange rate? (Round your answer to 4 decimal places,
e.g., 32.1616.)
e. What percentage rise or fall does this represent in terms of the Singapore dollar
versus the U.S. dollar? (Input the value as a positive number. Enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
a. Profit at current exchange rate
b. Profit if the exchange rate increases 10 percent
c. Profit if the exchange rate decreases 10
percent
d. Break-even exchange rate S$
e. Percentage change
%
/$
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