9 Suppose DeGraw Corporation, a U.S. exporter, sold a solar heating station to a
ID: 2673870 • Letter: 9
Question
9Suppose DeGraw Corporation, a U.S. exporter, sold a solar heating station to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar. In order to close the sale, DeGraw agreed to make the bill payable in yen, thus agreeing to take some exchange rate risk for the transaction. The terms were net 6 months. If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would DeGraw actually receive after it exchanged yen for U.S. dollars?
Answer
$1,075,958
$1,025,000
$1,000,000
$975,610
$929,404
Explanation / Answer
Suppose DeGraw Corporation, a U.S. exporter, sold a solar heating station to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar. In order to close the sale, DeGraw agreed to make the bill payable in yen, thus agreeing to take some exchange rate risk for the transaction. The terms were net 6 months. If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would DeGraw actually receive after it exchanged yen for U.S. dollars? The exchange rate was $1 = 140 Yen when the DeGraw Corporation sold heating station to a Japanese customer at a price of 139,000,000 Yen. $1 = 140 Yen 1Yen = $1 / 140 = $0.00714 After 6months, DeGraw agreed to make the bill payable in Yen when the exchange rate is $1 = 154.4 Yen 1 Yen = 1/ 154.4 = $0.006476 The price actually paid is 139,000,000 Yen. But now, the exchange rate has fell to 1Yen = $0.006476 Therefore, the dollar amount that is agreed by Degraw Corporation at the time of invoice is 1 Yen = $0.006476 139,000,000 Yen = ? (139,000,000 * $0.006476) / 1 = $900,164 Solve this for your answer.....
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