Emmilou's Designs, a Canadian Exporter, Operates in International Currencies to Transact

question 3

Multiple Choice

Emmilou's Designs, a Canadian exporter, operates in international currencies to transact business on both sides of the Atlantic and so, at a time when the Canadian dollar (CAN) was at $0.97 of the US dollar (USD) and the Euro was trading at .625USD, Emmilou Designs issued 5-year Eurobonds which provided them with the equivalent of $5,000,000CAN. At maturity, the Canadian dollar was worth $1.01USD and the Euro at 0.635USD. What was the financial impact of the exchange rates, in Canadian dollars, in the repayment of the face value of the Eurobonds at maturity?

• A) Cost $50,000
• B) Saved $192,756
• C) Saved $121,188
• D) Saved $2.9 million
• E) Cost $4.6 million

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