A UScompany That Imports Laptop Computers from Japan Knows That in in 30

question 26

Multiple Choice

A U.S.company that imports laptop computers from Japan knows that in 30 days it must pay in yen to a Japanese supplier when a shipment arrives.The company will pay the Japanese supplier ×150,000 for each computer,and the current dollar/yen spot exchange rate is $1 = ×110.The importer can sell the computers the day they arrive for $1,600 each.However,the importer will not have the funds to pay the Japanese supplier until the computers have been sold.The importer enters into a 30-day forward exchange transaction with a foreign exchange dealer at $1 = ×105.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 $171 per computer.
• C)The importer will earn a profit of approximately $65 per computer.
• D)The importer will incur a loss of approximately $67 per computer.
• E)The importer will incur a loss of approximately $105 per computer.

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