Currency Exchange Rates Custom Shutters, Inc., manufactures plantation shutters according to customer order. The company has a reputation for producing excellent quality shutters that fit virtually any size or shape of window. Sales are made in all 50 states. On July 1, Custom Shutters received orders from contractors in Switzerland and Japan. Lee Mills, president and co-owner of Custom Shutters, was delighted. The Swiss order is for shutters priced at $64,000. The order is due in Geneva on September 1, with payment due in full on October 1. The Japanese order is for shutters priced at $124,000. It is due in Tokyo on August 1, with payment due in full on October 1. Both orders are to be paid in the customer's currency. The Swiss customer has a reputation in the industry for late payment, and it could take as long as 6 months. Lee has never received payment in foreign currency before. He had his accountant prepare the following table of exchange rates: Exchange Rate for $1 Spot rate 30-Day forward rate Swiss Franc 90-Day forward rate 180-Day forward rate Required: Round your answers to the nearest dollar. Yen 1.2360 117.70 1.2450 117.68 1.2590 117.70 1.2708 117.66 1. If the price of the shutters is set using the spot rate as of July 1, how many francs does Lee expect to receive on October 1? How many yen does he expect on October 1? Swiss order Swiss francs Japanese order yen 2. Using the number of francs and yen calculated in Requirement 1, how many dollars does Lee expect to receive on October 1? Assume on-time payment and the 90-day forward rate holds. $ Will he receive that much? The amount that Lee will receive depends on the exchange rates in effect on . ?
Currency Exchange Rates Custom Shutters, Inc., manufactures plantation shutters according to customer order. The company has a reputation for producing excellent quality shutters that fit virtually any size or shape of window. Sales are made in all 50 states. On July 1, Custom Shutters received orders from contractors in Switzerland and Japan. Lee Mills, president and co-owner of Custom Shutters, was delighted. The Swiss order is for shutters priced at $64,000. The order is due in Geneva on September 1, with payment due in full on October 1. The Japanese order is for shutters priced at $124,000. It is due in Tokyo on August 1, with payment due in full on October 1. Both orders are to be paid in the customer's currency. The Swiss customer has a reputation in the industry for late payment, and it could take as long as 6 months. Lee has never received payment in foreign currency before. He had his accountant prepare the following table of exchange rates: Exchange Rate for $1 Spot rate 30-Day forward rate Swiss Franc 90-Day forward rate 180-Day forward rate Required: Round your answers to the nearest dollar. Yen 1.2360 117.70 1.2450 117.68 1.2590 117.70 1.2708 117.66 1. If the price of the shutters is set using the spot rate as of July 1, how many francs does Lee expect to receive on October 1? How many yen does he expect on October 1? Swiss order Swiss francs Japanese order yen 2. Using the number of francs and yen calculated in Requirement 1, how many dollars does Lee expect to receive on October 1? Assume on-time payment and the 90-day forward rate holds. $ Will he receive that much? The amount that Lee will receive depends on the exchange rates in effect on . ?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Currency Exchange Rates
Custom Shutters, Inc., manufactures plantation shutters according to customer order. The company has a reputation for producing excellent quality shutters that fit virtually any size or shape of
window. Sales are made in all 50 states. On July 1, Custom Shutters received orders from contractors in Switzerland and Japan. Lee Mills, president and co-owner of Custom Shutters, was
delighted. The Swiss order is for shutters priced at $64,000. The order is due in Geneva on September 1, with payment due in full on October 1. The Japanese order is for shutters priced at
$124,000. It is due in Tokyo on August 1, with payment due in full on October 1. Both orders are to be paid in the customer's currency. The Swiss customer has a reputation in the industry for late
payment, and it could take as long as 6 months. Lee has never received payment in foreign currency before. He had his accountant prepare the following table of exchange rates:
Exchange Rate for $1
Spot rate
30-Day forward rate
Swiss Franc
90-Day forward rate
180-Day forward rate
Required:
Round your answers to the nearest dollar.
Yen
1.2360
117.70
1.2450
117.68
1.2590
117.70
1.2708
117.66
1. If the price of the shutters is set using the spot rate as of July 1, how many francs does Lee expect to receive on October 1? How many yen does he expect on October 1?
Swiss order Swiss francs
Japanese order yen
2. Using the number of francs and yen calculated in Requirement 1, how many dollars does Lee expect to receive on October 1? Assume on-time payment and the 90-day forward rate holds.
$
Will he receive that much?
The amount that Lee will receive depends on the exchange rates in effect on .
?
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