Suppose your company imports computer motherboards from Singapore. The exchange
ID: 2797438 • Letter: S
Question
Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.5122 S$/US$. You have just placed an order for 23,000 motherboards at a cost to you of 231.55 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $161 each.
Calculate your profit if the exchange rates stay the same over the next 90 days. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Profit $
Calculate your profit if the exchange rate rises by 11 percent over the next 90 days. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Profit $
Calculate your profit if the exchange rate falls by 11 percent over the next 90 days. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Profit $
What is the break-even exchange rate? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
Break-even exchange rate S$ /$
What percentage decrease does this represent in terms of the Singapore dollar versus the U.S. dollar? (Enter your answer as a positive value. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Percentage decrease %
Explanation / Answer
Calculate your profit if the exchange rates stay the same over the next 90 days.
1 USD = 1.5122 Singapore Dollar
Purchase price in USD = 231.55/1.5122 = $153.12128
Selling price = $161
Profit = 161 - 153.12128 = $7.87872
Total Profit = $7.87872 * 23000 = $181,210.56
Calculate your profit if the exchange rate rises by 11 percent over the next 90 days
Rise in Exchange rate by 11% = 1.5122 * 1.11 = $1.678542
New purchase price = 231.55/1.678542 = $137.9471
Profit = 23000 * (161-137.9471) = 23000 * 23.0529 = $530,216.72
Calculate your profit if the exchange rate falls by 11 percent over the next 90 days.
Fall in Exchange rate by 11% = 1.5122 * (1-0.11) = $1.345858
New purchase price = 231.55/1.345858 = $172.046382
Profit = 23000 * (161-172.046382) = 23000 * -11.046382 = $254066.79
What is the break-even exchange rate?
To calculate Breakeven change in the exchange rate we need to find out exchange rate that makes cost in singapore dollar equal to selling price in USD
$161 = 231.55/St
St = 231.55/161 = Singapore $1.4382 (Answer)
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