Atreides International has operations in Arrakis. The balance sheet for this div
ID: 2512983 • Letter: A
Question
Atreides International has operations in Arrakis. The balance sheet for this division in Arrakeen solaris shows assets of 50,000 solaris, debt in the amount of 23,000 solaris, and equity of 27,000 solaris.
If the current exchange ratio is 1.25 solaris per dollar, what does the balance sheet look like in dollars? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Assume that one year from now the balance sheet in solaris is exactly the same as at the beginning of the year. If the exchange rate is 1.60 solaris per dollar, what does the balance sheet look like in dollars now? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.16.)
Assume that one year from now the balance sheet in solaris is exactly the same as at the beginning of the year. If the exchange rate is 1.20 solaris per dollar, what does the balance sheet look like in dollars now? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
a.
If the current exchange ratio is 1.25 solaris per dollar, what does the balance sheet look like in dollars? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Explanation / Answer
a.
Balance sheet will look like the following when exchange rate is 1.25 solaris per dollar.
Balance sheet
Assets
$40,000
Debt (23,000/1.25)
$ 18,400
(50,000 /1.25)
Equity (27,000/1.25)
$21,600
Total assets
$40,000
Total liabilities and equity
$ 40,000
b.
Balance sheet will look like the following when exchange rate is 1.60 solaris per dollar.
Balance sheet
Assets
$31,250
Debt (23,000/1.60)
$ 14,375
(50,000 /1.60)
Equity (27,000/1.60)
$16,875
Total assets
$31,250
Total liabilities and equity
$ 31,250
c.
Balance sheet will look like the following when exchange rate is 1.20 solaris per dollar.
Balance sheet
Assets
$41,666.6667
Debt (23,000/1.20)
$ 19,166.6667
(50,000 /1.20)
Equity (27,000/1.20)
$22,500
Total assets
$41,667
Total liabilities and equity
$ 41,667
Balance sheet
Assets
$40,000
Debt (23,000/1.25)
$ 18,400
(50,000 /1.25)
Equity (27,000/1.25)
$21,600
Total assets
$40,000
Total liabilities and equity
$ 40,000
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