Suppose your company imports computer motherboards from Singapore. You have just

Question

Suppose your company imports computer motherboards from Singapore. You have just placed an order for 25,000 motherboards at a cost to you of 142.30 Singapore dollars each. You will pay for the shipment when it arrives in 60 days. You can sell the motherboards for $131 each. The current exchange rate is S$1.1539/S. What is your profit at the current exchange rate? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16)) Profit at the current exchange rate 191,977 What is your profit if the exchange rate goes up by 15 percent prior to the shipment's a round intermediate calculations and round your final answer to 2 decimal places (o.g, 32.16).) er to 2 decimal places (o.g., 32.16).) Profit ifthe exchange rate up by 15% $ 594,1101o S594, 110.1 . What is your profitif the exchange rate goes down by 15 percent prior to the shipment's arrival? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g 32.16). Negative amount should be indicated by a minus sign.) Profit if the exchange rate down by 15% $ -352,085 What is the percentage change in the exchange rate that would result in a break-even profit? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (o.g. 32.16), Negative amount should be indicated by a minus sign.) Percentage ange in exchange rate -9.40 %

Explanation / Answer

Break-even profit will be achieved if 142.30 Singapore dollars become equal to 131 U.S. dollars.

For 142.30 Singapore dollars to be equal to 131 U.S. dollars, the exchange rate should be:

142.30 / 131 = S$1.086259541984733 / $

Or,

The exchange rate should go down by:

1.1539 - 1.086259541984733 = S$0.0676404580152672 / $

Therefore,

The percentage in exchange rate that would result in a break-even profit would be:

0.0676404580152672 / 1.1539 = 5.86%

Thus, the exchange rate should go down by 5.86% to get break-even profit.

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