NorthRim Inc

question 44

Multiple Choice

NorthRim Inc. (NRI) , imports extreme condition outdoor wear and equipment from The Allofit Territories Company (ATC) located in Canada. With the steady decline of the U.S dollar against the Canadian dollar NRI is finding a continued relationship with ATC to be an increasingly difficult proposition. In response to NRI's request, ATC has proposed the following risk-sharing arrangement. First, set the current spot rate of C$1.20/$as the base rate. As long as spot rates stay within 5% (up or down) NRI will pay at the base rate. Any rate outside of the 5% range, ATC will share equally with NRI the difference between the spot rate and the base rate. If NRI had a payable of C$100,000 due today and the current spot rate were C$1.17/$, how much would NRI owe in U.S. dollars?

• A) $83,333
• B) $85,470
• C) $85,837
• D) $117,000

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Definitions:

Yearly Income

The total amount of money earned by an individual or entity in one year from all sources.

SST

Sum of Squares Total, a measure in statistics used to quantify the variability within a dataset.

Sum Of Squares

A statistical measure used to describe the dispersion or variability within a data set, calculated as the sum of the squared differences from the mean.

Error

The difference between the observed value and the true value due to measurement or estimation inaccuracies.