Suppose your company imports computer motherboards from Singapore. The exchange

Question

Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.2875 S$US$. You have just placed an order for 28.000 motherboards at a cost to you of 23400 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $195 each. What is your profit at the current exchange rate? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Profit if the current exchange rate $ What is your profit if the exchange rate goes up by 10 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Profitiftheexchangerateupbyl0% _________ What is your profit if the exchange rate goes down by 10 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places. Negative amounts should be indicated by a minus sign.) Profit if the exchange rate down by 10% $ What is the break-even exchange rate? (Round your answer to 4 decimal places. (e.g., 32.1 616)) Break-even exchange rate S$ What percentage rise or fall does this represent in terms of the Singapore dollar versus the U.S. dollar? (Input the value as positive numbers.)

Explanation / Answer

1) profit at the current exchange rate= sales- purchase cost

                          = (28,000* 195) - (28,000*234/1.2875)

                         = 5,460,000- 5,088,932.04= $371,067.96

2) profit if the exchange rate goes up by 10%

          = 5,460,000- (28,000*234/1.41625)

          = 5,460,000- 4,626,301.85= $ 833,698.15

3) profit if the exhange rate goes down by 10%

     = 5,460,000- (28,000*234/ 1.15875)

    = 5,460,000- 5,654,368.93= - 194,368.93

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