Calculate profit per laptop

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Assume that Deborah Electronics expects a delivery of Fujitsu laptops in a month from a Japanese supplier. Each laptop sells at $1000 in the retail market whereas the import cost is ¥90,000 per unit. The spot exchange rate today is ¥95.238 per US dollar, but in 30 days the dollar is expected to depreciate to ¥86.956. Deborah Electronics can either (i) wait for a month and pay the supplier at the expected spot exchange rate or (ii) enter a 30-day forward exchange deal with Bank of America to buy yen forward at ¥92.308 per dollar. Calculate profit (or loss) per laptop under each scenario and suggest Deborah Electronics the better option.

Reference no: EM132630462

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