You own a small record label. You sell CDs through your Web site for $15, including shipping

Question:

You own a small record label. You sell CDs through your Web site for $15, including shipping and handling. You get an offer from someone who owns a record store in Germany who would like to sell your CDs. He wants to buy them at $10 each and sell them for $30. He says his profit from each sale would be €12 and he will split it with you. Assume the exchange rate between the dollar and the euro is $1 = €2.

a. How much profit would you get from the sale of each CD in the German store?

b. How much is that profit in dollars?

c. Is this a good business opportunity for you? Why or why not?

d. If the FX rate between the dollar and the euro falls to $1 = €1, will this still be a good business idea for you? Why or why not?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...