FutureForm, a U

question 101

Multiple Choice

FutureForm, a U.S. company, imports microprocessors from Japan. The company must pay in yen to the Japanese supplier within 30 days. In a particular exchange, the company must pay the Japanese supplier ¥150,000 for each microprocessor at the current dollar/yen spot exchange rate of $1 = ¥110. FutureForm intends to resell the microprocessors the day they arrive for $1,600 each but it does not have the funds to pay the Japanese supplier until these have been sold. What will happen if the exchange rate after 30 days is $1 = ¥90?

• A) The importer will earn a profit of approximately $236 per microprocessor.
• B) The importer will earn a profit of approximately $67 per microprocessor.
• C) The importer will incur a loss of approximately $236 per microprocessor.
• D) The importer will incur a loss of approximately $67 per microprocessor.
• E) The importer will incur a loss of approximately $90 per microprocessor.