Case-in-brief - Argentina Currency DevaluationYour company is currently operating in Argentina. Management is concerned to what extent the Argentine peso will be devalued. Itwants to examine two scenarios: one where the currency drops 15% and one where it drops 26%. Currently, the exchange rate is 94pesos (ARS$ 94) to 1 US dollar (US$1).Contribution after marketing in Argentina was 21% of sales (see Exhibit). Your goal is to maintain this percentage.Exhibit: Argentina Contribution after Marketing (ARS$ Argentine Pesos)Unit SalesManufacturer SalesCostsGross MarginTotal MarketingCont bution after MarketingUnits46ARS325.9 100%183.3142.673.369.3%56%44%22%21%QUESTION 1How would the devaluation of the Argentine peso (ARSS) affect your contribution in the home currency (US$)?Current contribution in USD (home currency): USD $ 0.000Contribution in USD after 15% drop: USD $ 0.000Contribution in USD after 26% drop: USD $ 0.000MillionsMillionMillionGo to last question

The question is asked for determining the effect of changes in the exchange rate on the total…

Answered: Case-in-brief - Argentina Currency…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Suppose your company imports computer motherboards from Singapore. The exchange rate is $1.4073 per Singapore dollar. You have just placed an order for 35,062 motherboards at a cost to you of S158 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $113 each. Calculate your profit if the exchange rates goes down by 14.51% over the next 90 days.
IBM purchased computer chips from NEC, a Japanese electronics concern, and was billed ¥250 million payable in three months. Currently, the spot exchange rate is #105/$ and the three-month forward rate is ¥100/$. The three-month money market interest rate is 8 percent per annum in the United States and 7 percent per annum in Japan. The management of IBM decided to use a money market hedge to deal with this yen account payable. a. Explain the process of a money market hedge and compute the dollar cost of meeting the yen obligation. b. Conduct a cash flow analysis of the money market hedge.
Suppose your company imports computer motherboards from Singapore. The exchange rate is $1.3595 per Singapore dollar. You have just placed an order for 39328 motherboards at a cost to you of S146 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $118 each. Calculate your profit if the exchange rates goes down by 12.23% over the next 90 days. NOTE: Enter the number rounding to four DECIMALS. If your decimal answer is 0.034576
Given the following information, take advantage of the triangular arbitrage opportunity and calculate the US dollar profit for an investment of $1,000,000. Keep at least two decimals in your calculations and round at the very end to enter your answer with no decimals (i.e, if your final answer is 9.98, you will enter 10). Singapore dollar in US dollars (USD/SGD) 0.73 US dollars in British pounds (GBP/USD) 0.83 Singapore dollar in British pounds (GBP/SGD) 0.71
A company manufactures a product in the United States and sells it in England. The unit cost of manufacturing is $52. The current exchange rate (dollars per pound) is 1.213. The demand function, which indicates how many units the company can sell in England as a function of price (in pounds) is of the power type, with constant 27556733 and exponent -2.5. A) Develop a model for the company's profit (in dollars) as a function of the price it charges (in pounds). Then use a data table to find the profit-maximizing price to the nearest pound. Assume that the price ranges from £45 to £100 in increments of £1. Round your answer for the maximum profit to the nearest dollar and your answer for the best price to the nearest pound. 1. Maximum profit: $______ 2. Best price: £ ______

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