The current indirect exchange rate is 12 pesos per dollar. The anticipated annual inflation rate is 6% in the United States and 14% in Mexico
If the cash inflow in pesos is 50,000 in one year, what are the 50,000 pesos worth in U.S. dollars after conversion from pesos to dollars using the forward exchange rate?
A) $3,480.78
B) $3,874.27
C) $3,882.13
D) $3,983.78
Answer: B
Explanation: B) First, we compute the forward exchange rate:
12 pesos per dollar × = 12.90566 pesos per dollar.
Second, we convert all pesos into dollars using the forward exchange rate:
= $3,874.27.
You might also like to view...
The income statement is sometimes called the statement of profit and loss
a. True b. False Indicate whether the statement is true or false
Give an example of a tradeoff between monetary and non-monetary costs associated with patronizing a dental clinic
What will be an ideal response?
A firm's current ratio is always lower than its quick ratio (for the same accounting period)
Indicate whether the statement is true or false
To be successful the partners in a joint venture should have symmetry.
Answer the following statement true (T) or false (F)