11.10 Cairo Ingot, LTD Cairo Ingot, Ltd., is the Egyptian subsidiary of Trans-Mediterranean Aluminum, a British multinational that fashions automobile engine blocks from aluminum. Trans-Mediterranean's home reporting currency is the British pound. Cairo Ingot's December 31st balance sheet is shown below. At the date of this balance sheet the exchange rate between Egyptian pounds and British pounds sterling was E5.50/UK. Use the balance sheet of Igot, LTD to build a spreadsheet to calculate net accounting exposures (exposed assets less exposed liabilities, and translation exposure on Dec 31st and at the end of quarter to answer the following questions: a. What is Cairo Ingot's contribution to the translation exposure of Trans-Mediterranean on December 31st, before the change in exchange rate, using the current rate method? Translation exposure before exchange rate change E5.50/UK (whole pounds, no decimal place): Ans: b. Calculate the translation exposure loss to Trans-Mediterranean if the exchange rate at the end of the following quarter at the new exchange rate of E6.00/. Assume all balance sheet accounts are the same at the end of the quarter as they were at the beginning. Ans: c. What is the translation net gain or loss after the exchange rate change? Ans: Assets Liabilities and Net Worth Cash Accounts E16,500,000 payable E24,750,000 Accounts Long-term receivable 33,000,000 debt 49,500,000 Invested 49,500,000 capital 90,750,000 Net plant and equipment 66,000,000 E165,000,000 E165,000,000 Inventory