On April 15, with the Canadian Dollar (CAN) Trading at $1.016

question 38

Multiple Choice

On April 15, with the Canadian dollar (CAN) trading at $1.016 to one US dollar (USD) , Lethbridge Saddlery Ltd. took delivery of $250,000(USD) worth of saddles and tack from a Montana supplier which Lethbridge paid through an operating loan at 5% in US currency. Lethbridge planned to repay the loan out of sales revenue 90 days later. If the exchange rate went to $0.980 CAN to one USD when the loan matured, how much did Lethbridge Saddlery Ltd. pay in interest in Canadian dollars?

• A) $3,034
• B) $3,131
• C) $3,020
• D) $12,303
• E) $12,700

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Definitions:

Probabilities

The quantification of how likely an event is to happen, expressed as a number ranging from 0 to 1, with 0 meaning it cannot occur and 1 meaning it will definitely happen.

Double Counting

An error in calculation or analysis that occurs when the same data or transaction is counted more than once, leading to inaccuracies.

Joint Probability Distribution

A statistical measure that gives the probability of two events occurring together and at the same point in time.

Discrete Random Variables

Variables that assume a finite or countably infinite set of values, each with a certain probability.