Question: how did you get the calculation to USD? Foreign exchange impacts the profitability of transactions in international markets. It can turn a profitable business into

Foreign exchange impacts the profitability of transactions in international markets. It can turn a profitable business into one that loses money and can turn an unprofitable business into one that makes money. In this assignment, you will analyze the impact of foreign exchange on different business scenarios and present your findings in a short business memo. Scenario You manage the international business for a manufacturing company. You are responsible for the overall profitability of your business unit. Your company ships your products to Malaysia. The retail stores that buy your products there pay you in their local currency, the Malaysian ringgit (MYR). All sales for the first quarter are paid on April 1st and use the exchange rate at the close of business on April 1st or the first business day after April 1st if it falls on a Saturday or Sunday. The company has sales contracts with different vendors that determine the number of units sold well in advance. The company is contractually obligated to sell 4,000 units for exactly 1.25 million MYR for the first quarter. The break-even point for each unit is $90 in U.S. dollars. Use the following foreign exchange rates: - On January 1, the daily spot rate is 3.13 MYR, and the forward rate is 0.317 U.S. dollars/MYR for April 1st of the same year. - On April 1, the daily spot rate is 3.52 MYR. Soltuion: Solution: The Proftability is $41250. Erplanation: The transactice is fully functiceal. In order to avoid the loss due to foreign ouchange aik, it is vey crocial to ceevider and hedge fereign exchange rik Jas 1. The forwad rate was $0.317/MrR. April 1. The spot rate was MYR. 3.525+1/3.52 -\$0 284MYR. Ias 1. The Company was entered into a ferwasd centract to in erder to arl the 125 millien MYR at $0.317 per MYR on April 1. On April 1, the spot rate was 50.284MYR, which was lower than the Forward nate that was used by the company on Jan 1 . Calculation of Prefitability Profitability = (Forwasd rate used-Spot rate on April 1)* 1,250,000 MYR =($0.317MYR90284MYR)1,250,000 =($0.033MYR)1,250,000 =$41,250 It's my humble request to please upvote $2 if it helped You. It will motivate me to provide quality answers. Thank You and All the best :)
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