Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN: 9781337902571
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 17, Problem 15P
a)
Summary Introduction
To identify: Whether the price of the automobile decreases or increases in the period of 35 years due to changes in the exchange rate.
Exchange rate is the rate which indicates the conversion rate for the currency of a country, which can get in exchange for the currency of another country, is the exchange rate.
b)
Summary Introduction
To determine: The dollar price of the automobile in the year August 2018.
The price of the automobile on the basis of change in the exchange is $19,864.86.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Early in June 1983, it took 245 Japanese yen toequal $1. In August 2017, that exchange rate had fallen to 109 yen to $1. Assume that theprice of a Japanese-manufactured automobile was $9,000 in June 1983 and that its pricechanges were in direct relation to exchange rates.a. Has the price, in dollars, of the automobile increased or decreased during the 34-yearperiod because of changes in the exchange rate?b. What would the dollar price of the automobile be in August 2017, again assuming thatthe car’s price changes only with exchange rates?
Last year, the exchange rate between the Korean won and the US dollar was KWN 1020 = USB 1. This year, the exchange rate is KWN 1150 =USB 1 . Has the Korean won appreciated or depreciated over the past year? Explain.
In December 1994 the government of Mexico officially changed the value of the Mexican peso from 3.2 pesos per dollar to 5.5 pesos per dollar.
Required :
What was the percentage change in its value? Was this a depreciation, devaluation, appreciation, or revaluation? Explain.
Calculate the Percentage Change in Value Values of Peso - Initial exchange rate (peso/$) 3.20 New exchange rate (peso/$) 5.50
Chapter 17 Solutions
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Ch. 17 - Why do U.S. corporations build manufacturing...Ch. 17 - If the euro depredates against the U.S. dollar,...Ch. 17 - If the United States imports more goods from...Ch. 17 - Prob. 4QCh. 17 - Prob. 5QCh. 17 - Prob. 6QCh. 17 - Prob. 7QCh. 17 - Prob. 1PCh. 17 - Prob. 2PCh. 17 - INTEREST RATE PARITY Six-month T-bills have a...
Ch. 17 - Prob. 4PCh. 17 - EXCHANGE RATES Table 17.1 lists foreign exchange...Ch. 17 - Prob. 6PCh. 17 - Prob. 7PCh. 17 - Prob. 8PCh. 17 - Prob. 9PCh. 17 - INTEREST RATE PARITY Assume that interest rate...Ch. 17 - Prob. 11PCh. 17 - INTEREST RATE PARITY Assume that interest rate...Ch. 17 - SPOT AND FORWARD RATES Arvin Australian Imports...Ch. 17 - EXCHANGE GAINS AND LOSSES You are the vice...Ch. 17 - Prob. 15PCh. 17 - FOREIGN INVESTMENT ANALYSIS After all foreign and...Ch. 17 - Prob. 19ICCh. 17 - Recreate Table 17.1 for the following currencies:...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Ganado Europe (A). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2, 2016, in Exhibit 11.5 dropped in value from $1.1400/€ to $0.8700/€. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the current rate method as shown in the popup window,. What is the amount of translation gain or loss? a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. $ (Round to the nearest dollar.) Where should it appear in the financial statements? The translation gain (loss) for the year is added to the balance in the Cumulative Translation Adjustment (CTA) account.arrow_forwardGanado Europe (A). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2, 2016, in Exhibit 11.5 dropped in value from $1.2800/€ to $0.9700/€. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the current rate method as shown in the popup window, a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? ... a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. (Round to the nearest dollar.)arrow_forwardLast year, the Mexican peso/U.S. dollar exchange rate was MXN13.3872/$. Today, the exchange rate is MXN16.5307/$. A U.S. firm has total assets worth MXN14,790,000 located in Mexico that did not change in value over the year. What was the change in the value of the assets in dollars on the company's U.S. balance sheet? Multiple Choice −$193,736.57 $210,087.71 −$210,087.71 $0 $193,736.57arrow_forward
- Ganado Europe (B). Using facts in the chapter for Ganado Europe, assume that the exchange rate on January 2, 2016, in Exhibit 11.6 dropped in value from $1.3000/€ to $0.9300/€. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the temporal rate method as shown in the popup window, a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? c. Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method? a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. $ (Round to the nearest dollar.)arrow_forwardA foreign exchange trader with a U.S. bank took a short position of £5,000,000 when the $/£ exchange rate was 1.48. Subsequently, the exchange rate has changed to 1.54. Is this movement in the exchange rate good from the point of view of the position taken by the trader? By how much has the bank’s liability changed because of the change in exchange rate?arrow_forward9arrow_forward
- Q4) Assume the current U.S. dollar-yen spot rate is 109.00¥/$. Further, the current nominal 360-day rate of return in Japan is 0.10% and 1.95% in the United States. What is the approximate forward exchange rate for 360 days? A) 110.85¥/$ 109.00¥/$ 107.02\/$ 111.01\/$arrow_forwardA3)arrow_forwardFrom base price levels of 100 in 2000, Japanese and U.S. price levels in 2006 stood at 98 and 109, respectively. If the 2000 $: ¥ exchange rate was $0.00928, what should the exchange rate be in 2006? Answer:arrow_forward
- True or false The spot rate of foreign exchange between Thailand and the United States is ฿30.7/$. The 180-day forward rate is ฿32.1/$. The Thai Baht (฿) is expected to depreciate relative to the US Dollar ($).arrow_forwardHow much foreign exchange gain (loss) will you recognize on December 31, 20x1? 100,000 (100,000) 200,000 (200,000)arrow_forwardAttempts 1. Measuring movements in exchange rates Average / 3 The following table shows hypothetical monthly exchange rates for the Canadian dollar and the euro, as well as the standard deviation of the percentage changes for each currency. Use the table to select the percent change from March 1 to April 1 in the Canadian dollar exchange rate and the euro exchange rate. Value of the Canadian Dollar (US Dollars per Canadian Dollar) Month January 1 February 1 March 1 April 1 May 1 June 1 July 1 Standard Deviation In this example, the value of the $0.62 0.63 0.64 0.66 0.67 0.65 0.66 Monthly Percent Change in Canadian Dollar Value 1.61% 1.59% 1.52% -2.99% 1.54% 2.08% The percentage change in the Canadian dollar from March 1 to April 1 represents Value of Euro (US Dollars per euro) $1.14 1.16 1.18 1.15 1.13 1.15 1.16 a depreciation no change an appreciation ▼ was more volatile over the entire time period. Monthly Percent Change in Euro Value 1.75% 1.72% -1.74% 1.77% 0.87% 1.94% in the value…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Fundamentals Of Financial Management, Concise Edi...FinanceISBN:9781337902571Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Fundamentals Of Financial Management, Concise Edi...
Finance
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning