: : : Poomphar Electronics Ltd in Chennai exports refrigerators to Belgium by importing all the components from South Korea. Imports are invoiced in Hong Kong dollars and exports in Euro. The company is exporting 6,000 units at a price of Euro 165 per unit. The cost of imported components is HK$ 750. The fixed costs and other variable costs per unit are Rs.1,200 and Rs.2,500 respectively. The cash flows in foreign currencies are due in six months. The current exchange rates are as follows: Rs./Euro 59.60/62 Rs./HK$ 5.96/5.98 After six months the exchange rates (at the time of receipt and payment of foreign currency) turn out as follows: Rs./Euro 60.30/32 Rs./HK$ 6.23/25 You are required to: a. Calculate the loss/gain due to the transaction exposure. b. Based on the following additional information, calculate the loss/gain due to transaction and operating exposure if the contracted price of washing machine is Rs.9,500. The current exchange rates change to Rs./Euro : 59.85/87 Rs./HK$ : 6.00/02 Price elasticity of demand of the product in Germany is estimated as 2.5. Payment and receipts are to be settled/received at the end of six months