please show your work. Megahurtz International Car Rentals has rent-a-car outlet

Question

please show your work.

Megahurtz International Car Rentals has rent-a-car outlets throughout the world. It keeps funds for transaction purposes in many foreign currencies. Assume that in 2015 it held 270,000 reals in Brazil worth 200,000 dollars. It earned 15 percent interest, but the real declined 30 percent against the dollar. a. What is the value of its holdings, based on Canadian dollars, at year end? Value of the holding:s b. What is the value of its holdings, based on Canadian dollars, at year end if it earned 12 percent and the real went up by 16 percent against the dollar? Value of the holdings

Explanation / Answer

Answer a Exchange rate in 2015 = 270000 reals / 200000 dollars = 1.35 real per dollar Revised exchange rate at year end i.e.real declined 30% against dollar = 1.35 real * 130% = 1.755 real per dollar Value of holding in real at year end = 270000 reals * 115% = 310500 reals Value of holding based on Canadian dollars at year end = 310500 reals / 1.755 real per dollar = 176923.08 dollars Answer b Revised exchange rate at year end i.e.real went up by 16% against dollar = 1.35 real * (1-0.16) = 1.134 real per dollar Value of holding in real at year end = 270000 reals * 112% = 302400 reals Value of holding based on Canadian dollars at year end = 302400 reals / 1.134 real per dollar = 266666.67 dollars

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