Suppose your company imports computer motherboards from Singapore. The exchange

Question

Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.5138 S$/US$. You have just placed an order for 39,000 motherboards at a cost to you of 231.20 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $164 each. (Enter your answer as directed, but do not round intermediate calculations.) Requirement 1: (a) 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).) (b) Calculate your profit if the exchange rate rises by 8 percent over the next 90 days(Round your answer to 2 decimal places (e.g., 32.16).) (c) Calculate your profit if the exchange rate falls by 8 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).) Requirement 2: What is the break-even exchange rate? (Round your answer to 4 decimal places (e.g., 32.1 616).) Break-even exchange rate SS 1.4097

Explanation / Answer

Point C) If exchange rate fall by 8%

Future Rate = 1.5138*(1-8%) = 1.392696 S$/US$

This means US $ has been depreciateed where as Singapore $ has been appreciated

Profit = (164 - 231.20/1.392696)*39000

Profit = - $ 78,349.03

Note : Profit is in negative

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