Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.3356 S$/US$. You have just placed an order for 30,000 motherboards at a cost to you of 218.50 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $175 each. a. Calculate your profit if the exchange rate stays the same over the next 90 days. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. Calculate your profit if the exchange rate rises by 10 percent over the next 90 days. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. Calculate your profit if the exchange rate falls by 10 percent over the next 90 days. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d. What is the break-even exchange rate? Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616. e. What percentage decrease does this represent in terms of the Singapore dollar versus the U.S. dollar? Note: Enter your answer as positive value. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.3356 S$/US$. You have just placed an order for 30,000 motherboards at a cost to you of 218.50 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $175 each. a. Calculate your profit if the exchange rate stays the same over the next 90 days. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. Calculate your profit if the exchange rate rises by 10 percent over the next 90 days. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. Calculate your profit if the exchange rate falls by 10 percent over the next 90 days. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d. What is the break-even exchange rate? Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616. e. What percentage decrease does this represent in terms of the Singapore dollar versus the U.S. dollar? Note: Enter your answer as positive value. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Chapter21: Risk Management
Section: Chapter Questions
Problem 3P
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Question
Transcribed Image Text:Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.3356
S$/US$. You have just placed an order for 30,000 motherboards at a cost to you of 218.50 Singapore dollars each.
You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $175 each.
a. Calculate your profit if the exchange rate stays the same over the next 90 days.
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
b. Calculate your profit if the exchange rate rises by 10 percent over the next 90 days.
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
c. Calculate your profit if the exchange rate falls by 10 percent over the next 90 days.
Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.
d. What is the break-even exchange rate?
Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.
e. What percentage decrease does this represent in terms of the Singapore dollar versus the U.S. dollar?
Note: Enter your answer as positive value. Do not round intermediate calculations and enter your answer
as a percent rounded to 2 decimal places, e.g., 32.16.
a. Profit
b. Profit
c. Profit
d. Break-even exchange rate
e. Percentage decrease
S$
/$
%
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