An American Company Imports Laptop Computers from Japan

question 28

Multiple Choice

An American company imports laptop computers from Japan.The company knows that after a shipment arrives,it must pay in yen to the Japanese supplier within 30 days.In a particular exchange,the American company must pay the Japanese supplier ×150,000 for each computer at the current dollar/yen spot exchange rate of $1 = ×110.The company intends to resell the computers the day they arrive for $1,600 each but it does not have the funds to pay the Japanese supplier until the computers have been sold.Which of the following will happen if the exchange rate after 30 days is $1 = ×90?

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

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