Suppose Yates Inc

question 39

Multiple Choice

Suppose Yates Inc., a U.S.exporter, sold a consignment of antique American muscle-cars 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, Yates 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 Yates actually receive after it exchanged yen for U.S.dollars?

• A) $1,075,958
• B) $1,025,000
• C) $1,000,000
• D) $975,610
• E) $929,404

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Definitions:

Shareholders

Shareholders are individuals or entities that own one or more shares of stock in a corporation, giving them a claim on part of the corporation's assets and earnings.

Reinvest

To allocate earnings or profits back into a business, venture, or asset to potentially achieve further growth or gains.

Domestic Corporation

A corporation located in the state in which it is incorporated.

Incorporated

A legal status indicating that a company has been registered under corporate laws and is recognized as a distinct legal entity separate from its owners.