A US Firm Is Expecting Cash Flows of 20 Million Mexican

question 9

Multiple Choice

A U.S. firm is expecting cash flows of 20 million Mexican pesos and 35 million Indian rupees. The current spot exchange rates are: $1 = 11.792 pesos and $1 = 49.204 rupees. If these cash flows are not received for one year and the expected spot rates at that time will be $1 = 11.118 pesos and $1 = 41.075 rupees, then what is the difference in dollars received that was caused by the delay?

• A) $0.03 million
• B) $0.15 million
• C) $0.24 million
• D) $0.32 million

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Definitions:

Minimum Assets

The least amount of assets required by a regulatory body or financial institution for a company to operate or qualify for financing.

Revenue Test

A criterion used to determine the effectiveness of a business's ability to generate income.

Total Amount

The complete sum or quantity calculated by adding together all the individual components or values.

Revenues

The total amount of income generated by the sale of goods or services related to a company's primary operations.