Question: 5. (10 points) Smith Laboratories is offering an incentive plan to their pacemaker sales force. If Smith Laboratories meets their pacemaker sales goals for the

5. (10 points) Smith Laboratories is offering an incentive plan to their pacemaker sales force. If Smith Laboratories meets their pacemaker sales goals for the fourth quarter 2021, then Smith Laboratories will hold its five-day sales training meeting at the Slippery Slope ski resort hotel in Banff, Canada for its pacemaker salesforce beginning on January 16, 2022. If Smith Laboratories doesn't meet its pacemaker sales goals, the sales training meeting will be held in the United States. If the training session is held in Banff, the hotel bill for the Slippery Slope ski resort would be C$3,000,000, due on January 16, 2022. Currently, one Canadian dollar equals $0.79 in the spot market.

What could go wrong for Smith Laboratories in the market for foreign currency?

If Smith Laboratories finances a new office building in Florida, by borrowing Canadian Dollars from TD Bank, how will its exchange rate exposure change? Why?

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