Homework Answers
The total liabilities of the firm is calculated below:
Total liabilities = Current liabilities + Long term debt equity
Total liabilities = 750,000 + 3,400,000 = 4,150,000
Firm can calculate the net exposed assets by deducting liabilities from assets. The net exposed asset is calculated below:
Net exposed asset = 9,050,000 - 4,150,000 = 4,900,000
It is given in the question that value of SF is changes from $0.700 to $0.751.
The SF is appreciated by $0.751 - $0.700 = $0.051
So, the translation gain will be:
Translation gain = 4,900,000 × $0.051 = $249,900
Hence, the 2nd option is correct.
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