Financial impact of an exchange rate

Reference no: EM131007449

1. You just purchased a new sound system for $1,542.75. Based on current exchange rates, how much would the system have cost in:

a. Brazilian reals

b. Danish krones

c. Polish zlotys

d. Swiss francs

2. You are the CFO of Symantics Corp., which is considering investing $40 million in a plant in India. You have heard that there has been quite a bit of movement in the exchange rates between the U.S. dollar and the Indian rupee in the past few years. Before investing the firm's money, you want to understand the exchange rate risks involved.

a. Record the indirect exchange rate between the rupee and the dollar for each month of the last three years.

b. During which periods has the dollar been strengthening against the rupee and during which periods has it been weakening?

c. Assume Symantics builds the plant when the exchange rate is 45 rupees to the dollar. Describe the financial impact of an exchange rate movement to 40 rupees to the dollar on Symantics. Describe the impact of a movement to 50 rupees to the dollar.

Reference no: EM131007449

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