Suppose your company imports computer motherboards from Singapore. You have just
ID: 2794108 • Letter: S
Question
Suppose your company imports computer motherboards from Singapore. You have just placed an order for 30,000 motherboards at a cost to you of 229.50 Singapore dollars (SND) each. The spot exchange rate is SND1.2528 per $1. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $195 each. If the exchange rate goes up by 10% over the next 90 days, what will be the change in your profit?
-$153,918.50
–$256,321.84
$354,310.34
$499,608.16
a.-$153,918.50
b.–$256,321.84
c.$354,310.34
d.$499,608.16
Explanation / Answer
Today :
Cost per motherboard Today in US $ = 229.50/1.2528 = $ 183.18966
Profit = 195-183.18966 = 11.81034 per motherboard
If after one year ,exchange rate appreciated to 1.2528(1+.10)=SND 1.37808
Cost per motherboard in $ = 229.5/1.37808 = $ 166.53605
Profit = 195-166.53605 = $28.46395
Change in profit per montherboard = 28.46395-11.81034 = 16.65361
Total change 30000*16.65361 = $ 499608.3 [neares to 499608.16]
correct option is "D"
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