Question 38 - 38. You are considering sourcing an identical product from three d

Question

Question 38 -

38.       You are considering sourcing an identical product from three different manufacturers, each of which sells the product in exchange for its local currency. Assume that there are no transportation, or any other costs associated with purchase. From which manufacturer would you buy--based upon price? The cost of this identical product in the three different countries is: 540 Yen, 3.8 British pounds, and 4.2 Euros. Current exchange rates are:

90 ¥Yen per $1

$ 1.667 per £1

€ 0.71 per $1

90 ¥Yen per $1

$ 1.667 per £1

€ 0.71 per $1

Explanation / Answer

Answer:The cost of this identical product in the three different countries is:

=540 yen/90 Yen

=$6

Current exchange rate: $ 1.667 per £1

=3.8 British pounds*$1.667/ £1

=$6.3346

Current exchange rate:€ 0.71 per $1

=4.2 Euros/€ 0.71

=$5.915

I would like to purchase at 4.2 Euros.

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