Suppose your company imports computer motherboards from Singapore. The exchange

Question

Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.5135 S$/US$. You have just placed an order for 36,000 motherboards at a cost to you of 231.05 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $161 each. (Enter your answer as directed, but do not round intermediate calculations.)

Calculate your profit if the exchange rates stay the same over the next 90 days.(Round your answer to 2 decimal places (e.g., 32.16).)

Calculate your profit if the exchange rate rises by 11 percent over the next 90 days.(Round your answer to 2 decimal places (e.g., 32.16).)

Calculate your profit if the exchange rate falls by 11 percent over the next 90 days.(Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).)

What is the break-even exchange rate? (Round your answer to 4 decimal places (e.g., 32.1616).)

What percentage decrease does this represent in terms of the Singapore dollar versus the U.S. dollar? (Input the amount as positive value. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Explanation / Answer

REQUIREMENT 1-

A./ SELLING PRICE OF 3600 MOTHER BOARDS AFTER 90 DAYS (3600 * 161$) =$579600

LESS- PAYMENT FOR 3600 MOTHER BOARDS AT 90 DAYS [(3600 *231.05 S$) /1.5315 S$]=($543114.59)

  PROFIT =$36485.41

B./ IF THE EXCHANGE RATE INCREASED BY 11% IN 90 DAYS, NEW EXCHANGE RATE WILL BE

[1.5135 S$ +(11%*1.5135)] =S$1.6799

SELLING PRICE OF 3600 MOTHER BOARDS AFTER 90 DAYS (3600 * 161$) =$579600

LESS- PAYMENT FOR 3600 MOTHER BOARDS AT 90 DAYS [(3600 *231.05 S$) /1.6799 S$]=($495136.62)

  PROFIT =$84463.38

C./ IF THE EXCHANGE RATE INCREASED BY 11% IN 90 DAYS, NEW EXCHANGE RATE WILL BE

[1.5135 S$ - (11%*1.5135)] =S$1.3470

SELLING PRICE OF 3600 MOTHER BOARDS AFTER 90 DAYS (3600 * 161$) =$579600

LESS- PAYMENT FOR 3600 MOTHER BOARDS AT 90 DAYS [(3600 *231.05 S$) /1.3470 S$]=($617505.56)

PROFIT/(LOSS) =($37905.56)

REQUIREMENT 2-

BREAK EVEN EXCHANGE RATE IS THE RATE WHERE THERE WILL BE NO PROFIT OR NO LOSS, SO THE PURCHASE PRICE AND SELLING PRICE WILL BE EQUAL.

SO 231.05 S$= 161$

1$=1.4351S$ OR 1.4351S$ / US$

BREAK EVEN EXCHANGE RATE IS 1.4351S$ / US$

REQUIREMENT 3-

PRESENT EXCHANGE RATE =1.5135S$ / US$

BREAK EVEN EXCHANGE RATE =1.4351S$ / US$

DECEREASE IN EXCHANGE RATE =0.0784S$ / US$

PERCENTAGE DECEREASE (0.0784S$ /1.5135S$)*100=5.18%

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