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Boisjoly Watch Imports Exchange Rate Changes

Boisjoly Watch Imports has agreed to purchase 15,000 Swiss watches for 1 million francs at today's spot rate. The firm's financial manager, James Destreumaux, has noted the following current spot and forward rates:

U.S.Dollar/Franc Franc/U.S. Dollar

Spot 1.6590 0.6028
30-day forward 1.6540 0.6046
90-day forward 1.6460 0.6075
180-day forward 1.6400 0.6098

On the same day, Desreumaux agrees to purchase 15,000 more watches in 3 months at the same price of 1 million francs.

What is the price of the watches, in U.S. dollars, if purchased at today's spot rate?

What is the cost, in dollars, of the second 15,000 batch if payment is made in 90 days ant the spot rate at that time equals today's 90-day forward rate?

If the exchange rate for the Swiss franc is 0.50 to $1 in 90 days, how much will he have to pay for the watches (in dollars)?

Solution Preview

Boisjoly Watch Imports has agreed to purchase 15,000 Swiss watches for 1 million francs at today's spot rate. The firm's financial manager, James Destreumaux, has noted the following current spot and forward rates:

U.S.Dollar/Franc Franc/U.S. Dollar

Spot 1.6590 ...

Solution Summary

This solution displays the workings out needed to find the answers about exchange rate changes and spot rates. 204 words.

$2.19