Question: International Products has contracted for 5 000 winter hats from Russia
International Products has contracted for 5,000 winter hats from Russia. The contract price is 1,375 rubles per hat. The current direct exchange rate is 0.03562. The expected inflation rate for the next nine months is 5% in the United States and 2% in Russia. If International Products will pay for the hats at delivery and scheduled delivery is nine months away, what is the cost of the hats in U.S. dollars? Did waiting the nine months to pay increase or decrease the payment (in U.S. dollars)? If so, by how much?
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