20 20 Assumptions Invoice Price of a TV Set at a Dutch TV Manufacturer Spot Exchange...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
20 20 Assumptions Invoice Price of a TV Set at a Dutch TV Manufacturer Spot Exchange Rate (AS/E) Risk Sharing Band, Percentage Sales to Australian Distributors a. What are the outside ranges? (Initial Spot Rate + or - 10 %) b. Cost to the Australian Distributor for 100 TV Sets New Current Spot Rate (AS/) - Is this within the band? Costs of 100 TV Sets at this Exchange Rate (AS/E) Receipts to the Dutch TV Exporter in Euros (Within the band the Dutch Manufacturer receives 1,000 per TV set) c. Cost to the Australian Distributor for 100 TV Sets New Current Spot Rate (AS/E) Is this within the band? Costs of 100 TV Sets at this Exchange Rate (AS/E) (Equal Risk Sharing) Values 1,000 1.5000 10.00% Lower Band (For the Australian Importer) Upper Band (For the Australian Importer) 1.65 1.35 1.60 Yes 100 1,000* 1.60 AS/E= A$ 160,000 100* 1,000= 100,000 100* 1,000* 1.75 No AS/E (1.65+ (1.75-1.65))= 2 = 100* 1,000*1.70 AS/ = AS 170,000 This is more advantageous to the Australian importer since purchasing those TV sets at the current exchange rate would result in 100* 1,000*1.75 AS/= =AS 175,000 Receipts to the Dutch TV Exporter in Euros d. Cost to the Australian Distributor for 100 TV Sets = AS 170,000/ 1.75 AS/E= = 97,142.86 (If Australian dollar significantly depreciates relative to euro falling outside the bottom range for the Australian importer, the Dutch exporter takes some of the burden of the Australian importer by absorbing some of the exchange rate fluctuation like offering discount). New Current Spot Rate (AS/E) Is this within the band? Costs of 100 TV Sets at this Exchange Rate (AS/E) (Equal Risk Sharing) Receipts to the Dutch TV Exporter in Euros 100* 1,000* 1.25 No AS/E (1.35 (1.35-1.25))= 2 = 100* 1,000*1.30 AS/E = AS 130,000 This is more advantageous to the Dutch manufacturer since selling those TV sets at the current exchange rate would result in 100 1,000*1.25 AS/E= =AS 125,000 = AS 130,000/ 1.25 AS/= = 104,000 (If Australian dollar significantly appreciates relative to euro falling outside the top range for the Australian importer, the Australian importer takes some of the burden of the Dutch exporter by absorbing some of the exchange rate fluctuation like offering premium). 20 20 Assumptions Invoice Price of a TV Set at a Dutch TV Manufacturer Spot Exchange Rate (AS/E) Risk Sharing Band, Percentage Sales to Australian Distributors a. What are the outside ranges? (Initial Spot Rate + or - 10 %) b. Cost to the Australian Distributor for 100 TV Sets New Current Spot Rate (AS/) - Is this within the band? Costs of 100 TV Sets at this Exchange Rate (AS/E) Receipts to the Dutch TV Exporter in Euros (Within the band the Dutch Manufacturer receives 1,000 per TV set) c. Cost to the Australian Distributor for 100 TV Sets New Current Spot Rate (AS/E) Is this within the band? Costs of 100 TV Sets at this Exchange Rate (AS/E) (Equal Risk Sharing) Values 1,000 1.5000 10.00% Lower Band (For the Australian Importer) Upper Band (For the Australian Importer) 1.65 1.35 1.60 Yes 100 1,000* 1.60 AS/E= A$ 160,000 100* 1,000= 100,000 100* 1,000* 1.75 No AS/E (1.65+ (1.75-1.65))= 2 = 100* 1,000*1.70 AS/ = AS 170,000 This is more advantageous to the Australian importer since purchasing those TV sets at the current exchange rate would result in 100* 1,000*1.75 AS/= =AS 175,000 Receipts to the Dutch TV Exporter in Euros d. Cost to the Australian Distributor for 100 TV Sets = AS 170,000/ 1.75 AS/E= = 97,142.86 (If Australian dollar significantly depreciates relative to euro falling outside the bottom range for the Australian importer, the Dutch exporter takes some of the burden of the Australian importer by absorbing some of the exchange rate fluctuation like offering discount). New Current Spot Rate (AS/E) Is this within the band? Costs of 100 TV Sets at this Exchange Rate (AS/E) (Equal Risk Sharing) Receipts to the Dutch TV Exporter in Euros 100* 1,000* 1.25 No AS/E (1.35 (1.35-1.25))= 2 = 100* 1,000*1.30 AS/E = AS 130,000 This is more advantageous to the Dutch manufacturer since selling those TV sets at the current exchange rate would result in 100 1,000*1.25 AS/E= =AS 125,000 = AS 130,000/ 1.25 AS/= = 104,000 (If Australian dollar significantly appreciates relative to euro falling outside the top range for the Australian importer, the Australian importer takes some of the burden of the Dutch exporter by absorbing some of the exchange rate fluctuation like offering premium).
Expert Answer:
Answer rating: 100% (QA)
Answer Based on the provided information lets analyze the scenarios for the Australian importer and ... View the full answer
Related Book For
Multinational Business Finance
ISBN: 978-0133879872
14th edition
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
Posted Date:
Students also viewed these finance questions
-
The client inspects the deliverables with you, and finds that they meet the acceptance criteria. He signed off and formally approves the deliverables. Which process is this: The client inspects the...
-
"MacLoren Automtive manufactures British sports cars, a number of which are exported to New Zealand for payment in pounds sterling. The distributor sells the sports cars in New Zealand for New...
-
CANMNMM January of this year. (a) Each item will be held in a record. Describe all the data structures that must refer to these records to implement the required functionality. Describe all the...
-
Steel It began January with 55 units of iron inventory that cost $35 each. During January, the company completed the following inventory transactions: Requirements 1. Prepare a perpetual inventory...
-
Congressional pay in 2000 was $141.3 thousand, and it increased by approximately $3.6 thousand per year for the period 20002009. a. Complete Table 31 to help find an expression that stands for the...
-
A mechatronic assembly is subjected to a final functional test. Suppose that defects occur at random in these assemblies, and that defects occur according to a Poisson distribution with parameter =...
-
Doolin Company's Speedo pocket calculator sells for \($40\). Variable costs per unit are estimated to be \($24\). What are the contribution margin per unit and the contribution margin ratio?
-
A comparative balance sheet for Alcorn Company containing data for the last two years is as follows: The following additional information is available about the companys activities during this year:...
-
PROBLEM 1 Howlett and Gambit manufactures microwaves and refrigerators. Microwaves are relatively simple to produce and are made in large quantities, while the refrigerators are customized to...
-
Think of your industry (or the industry you're studying), write a sentence to describe something you measure for each of the following categories. Short Answer: Learner must write a sentence for each...
-
Use the following multiple step income statement of Oriole Company to prepare a single-step version. Oriole Company Income Statement For the Year Ended December 31, 2025 Sales Sales revenue Less:...
-
Computing Impairment of Patent In January of Year 1, Idea Company purchased a patent for a new consumer product for $442,000. At the time of purchase, the remaining legal life of the patent was 17...
-
Describe one (1) way that the decision to invest in stocks affects financial planning, liquidity management, financing, and protecting your wealth.
-
C) Consider which of the six ethical principles are of major importance in this situation. Also secure additional information, consult with knowledgeable colleagues or the OCSWSSW Ethics committee...
-
Assuming Target's industry had an average current ratio of 1.0 and an average debt to equity ratio of 2.5, what is Target's liquidity and long-term solvency.
-
Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours Hubs Sprockets per Unit Annual Production 0.70 14,000 units 0.30 59,000...
-
At Glass Company, materials are added at the beginning of the process and conversion costs are added uniformly. Work in process, beginning: Number of units Transferred - in costs Direct materials...
-
Due to unforeseen circumstances, you have to take out a student loan for your senior year. Which one of the following loans should you choose? a. A loan with a nominal 10 percent interest rate with...
-
Find the value at time 50 of the set of end-of-year cash flows shown, if the appropriate rate of return is 11 percent per year: a. $179,255 b. $1,255,000 c. $33,079,044 d. $6,106,191,094 Year(s) 1...
-
Sharon Livingston Manufacturing Company uses the following budgets: Balance Sheet, Capital Expenditure, Cash, Direct Labor, Direct Materials, Income Statement, Manufacturing Overhead, Production,...
Study smarter with the SolutionInn App