Suppose your company imports computer motherboards from Singapore. The exchange

Question

Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.5133 SS/USS. You have just placed an order for 34,000 motherboards at a cost to you of 230.95 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $164 each Calculate your profit if the exchange rates stay the same over the next 90 days. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Calculate your profit if the exchange rate rises by 8 percent over the next 90 days. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Profit Calculate your profit if the exchange rate falls by 8 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 What is the break-even exchange rate? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) Break-even exchange rateSS 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

Explanation / Answer

1.Calculation of profit at current exchange rate :

1.Calculation of profit at current exchange rate :

                   Exchange rate = $1.5133/US$ (In direct quote in US)                    Sale price per mother board = US$164.00          Less: Cost price per mother board = US$152.58   (230.90/1.5133)                    Profit per one mother board = US$11.42                                             Total profit = $388,280.00 (34,000*$11.42) 2) If exchange rate goes up by 8% then profit :                               Current exchange rate = S$1.5133/US$                         Increase exchange rate = S$1.6343 (1.5133+8%)                             Sale price per mother board = US$164.00                    Less: Cost price per mother board = US$141.28 (230.90/1.6344)                             Profit per one mother board = US$22.72                                                     Total profit = US$772,480   (34,000*$22.72) 3) if exchange rate goes down by 8% then the profit :                               Current exchange rate = S$1.5133/US$                         Increase exchange rate = S$1.3922 (1.5133-8%)                             Sale price per mother board = US$164.00                    Less: Cost price per mother board = US$165.85 (230.90/1.3922)                              Loss per one mother board = US$1.85                                                     Total Loss = US$62,900   (34,000*$1.85) 4) Break even exchange rate :              Break even exchange rate = Cost price in singapore dollars / Sale price in US dollars                                                     = 230.90 / 164                                                     = S$1.4079/US$

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