(SPOT EXCHANGE RATE) Suppose 1 year ago, Miller Company had inventory in Britain
ID: 2768149 • Letter: #
Question
(SPOT EXCHANGE RATE)
Suppose 1 year ago, Miller Company had inventory in Britain valued at 2 million Swiss francs. The exchange rate for dollars to Swiss francs was 1 franc = 1.14 dollars. Today, the exhcnage rate is 1 Swiss franc = 1.06 US dollars. The inventory in Switzerland is still valued at 2 million francs. What is the US dollar gain or loss in inventory value as a result of the change in exchange rates? Enter a positive number for a gain and a negative for a loss. ROUND TO THE NEAREST DOLLAR.
Explanation / Answer
US dolalr value of the inventory = 2*10^6*1.14 = $2280000
US dolalr value of of onvesntory 1 year later = $2120000
There would be loss of $160000 as result of exchange value
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