There is a proposal to hire foreign services on a monthly basis rather than the current long-term contracts at fixed foreign currency prices. Using past data, it is estimated that there will be a 5 per cent saving as a result. Present a brief report on the effect of exchange rates on this plan addressing likely scenarios and important risk factors.

Questions 11 to 15 relate to the following income statement for YTR plc.

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GBPEUR 1.2 GBPBHD 0.51 Foreign s Bahraini Domestic Total Dinar (BHD) s Sales 150,000 100,000 120,000 441,078 Cost of sales 120,000 270,000 370,000 Gross profit 71,078 Expenses 5,000 20,000 10,000 53,382 Net profit 17,696