Suppose Yates Inc., a U.S. exporter, sold a consignment of antique American muscle cars to a...
Suppose Yates Inc., a U.S. exporter, sold a consignment of
antique American
muscle cars to a Japanese customer at a price of 143.5 million yen,
when the
exchange rate was 140 yen per dollar. In order to close the sale,
Yates agreed to
make the bill payable in yen, thus agreeing to take some exchange
rate risk for the
transaction. The terms were net 6 months. If the yen fell against
the dollar such
that one dollar would buy 154.4 yen when the invoice was paid, what
dollar
amount would Yates actually receive after it exchanged yen for U.S.
dollars?
Homework Answers
Dollar amount received = Amount in Yen*Exchange Rate
= 143,500,000/154.4
= $929,404.1451
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