Oriol Díez Miguel S.R.L., a manufacturer of heavy duty machine tools near Barcelona, ships an order to a buyer in Jordan. The purchase price is €425,000. Jordan imposes a 13% import duty on all products purchased from the European Union. The Jordanian importer then re-exports the product to a Saudi Arabian importer, but only after imposing their own resale fee of 28%. Given the following spot exchange rates on April 11, 2010, what is the total cost to the Saudi Arabian importer in Saudi Arabian riyal, and what is the U.S. dollar equivalent of that price?
Oriol Díez Miguel S.R.L., a manufacturer of heavy duty machine tools near Barcelona, ships an order to a buyer in Jordan. The purchase price is €425,000. Jordan imposes a 13% import duty on all products purchased from the European Union. The Jordanian importer then re-exports the product to a Saudi Arabian importer, but only after imposing their own resale fee of 28%. Given the following spot exchange rates on April 11, 2010, what is the total cost to the Saudi Arabian importer in Saudi Arabian riyal, and what is the U.S. dollar equivalent of that price?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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C. Oriol Díez Miguel S.R.L., a manufacturer of heavy duty machine tools near
Barcelona, ships an order to a buyer in Jordan. The purchase
Jordan imposes a 13% import duty on all products purchased from the
European Union. The Jordanian importer then re-exports the product to a Saudi
Arabian importer, but only after imposing their own resale fee of 28%.
Given the following spot exchange rates on April 11, 2010, what is the total cost
to the Saudi Arabian importer in Saudi Arabian riyal, and what is the U.S. dollar
equivalent of that price?
| Currency Crossrate | Spot Rate |
| Jordanian dinar (JD) per euro (€) | JD 0.96/€ |
| Jordanian dinar (JD) per U.S. dollar ($) | JD 0.711/$ |
| Saudi Arabian riyal (SRI) per U.S. dollar ($) | SRI 3.751/$ |
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