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A B D E Problem 3.12 Middle East Exports 4 5 6 7 8 9 10 11 Oriol Diez Miguel S.R.L., a manufacturer of heavy
A B D E Problem 3.12 Middle East Exports 4 5 6 7 8 9 10 11 Oriol Diez Miguel S.R.L., a manufacturer of heavy duty machine tools near Barcelona, ships an order to a buyer in Jordan. The purchase price is 425,000. Jordan imposes a 13% import duty on all products purchased from the European Union. The Jordanian importer then re-exports the product to a Saudi Arabian importer, but only after imposing their own resale fee of 28%. Given the following spot exchange rates on April 11, 2010, what is the total cost to the Saudi Arabian importer in Saudi Arabian riyal, and what is the U.S. dollar equivalent of that price? JD 0.96/ 13 JD 0.711$ SRI 3.751/8 Values 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 Spot rate, Jordanian dinar (JD) per euro Spot rate, Jordanian dinar (JD) per U.S. dollar Spot rate, Saudi Arabian riyal (SRI) per U.S. dollar Assumptions Purchase price, in euros () Spot rate of exchange, Jordanian dinar per euro (JD/) Spot rate of exchange, Jordanian dinar per dollar (JD/S) Spot rate, Saudi Arabian riyal per Jordanian dinar (SRI/JD) Jordanian import duty on EU products Jordanian resale fees Spot rate of exchange, Saudi Arabian riyal (SRI/S) What is the dollar price after all exchanges and fees? Purchase price, converted to Jordanian dinar (JD) Additional fees due on importation Total cost, Jordanian dinar (JD) Resale fee in Jordan Resale price to Saudi Arabian, in JD Price paid in Saudi Arabian riyal, converting JD to SRI (spot rate (SRI/JD) x Resale price to Saudi Arabian (ID)) U.S. dollar equivalent of final price paid
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