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Exchange rate

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A) Suppose your company has an international operation. Last month, when the exchange rate between the US Dollar and the Japanese Yen was 130.00, your company contracted to purchase inventory from a Japanese company for Y13,000,000, payable in 30 days in Japanese currency. This month the exchange rate is onyl 125.00. Calculate, if any, your company's gain or loss due to the exchange rate fluctuation

b) Last month, your company sold some merchandise to a Mexican customer for
MP33,750,000. The exchange rate at the time was 225.00. You just received the pesos due, but the exchange rate is now 240.00. What is, if any, your company's gain or loss in this transaction

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Solution Summary

This shows how to determine gain or loss for a company with exchange rates.

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a) Last month, each USD is worth 130 Yen, the Y 13,000,000 is worth $100,000
This month, ...

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