After lengthy negotiations a U.S. company has made a deal to sell 100,00 units of a streaming device to an large electronics retailer in Brazil. The Brazilian company is paying 12$ for each unit and will pay in US dollars to the US seller. The U.S. company does not manufacture or assemble the streaming devices but purchases them from a Japanese manufacturer. To make the deal happen, the U.S. company agrees to pay in Japanese Yen. The price for each unit is 1000Yen. The U.S. company estimates its marginal (additional cost per unit) costs ( for warehousing, insurance, transportation, and so on) as an additional .25 per streaming unit.

Exchange rates at the time of signing the agreements are as follows:

USD$ 1 = 125 YEN USD$ 1 = Brazilian Real .57

Questions:

1. On the line below indicate whether the firm earned a profit or loss from this deal and what was the $ dollar amount of the profit or loss in total. (Clearly state if a profit or loss was earned, what it was and show profit or loss calculation clearly with labels in space below)

_________Place word profit or loss on line.

_________Place amount on line.

Show work clearly below:

1. a) What impact would a depreciation of the Japanese Yen relative to the U.S. dollar have on the U.S. company's profits/loss on this transaction? You must look at the relevant impact on Revenue and/or Costs for # 2,3, and 4. (chose increase profit, increase loss, decrease profit, decrease loss, or no change and place this answer on line below)

_________Ans. Why?

1. a) What impact would a depreciation of the Brazilian Real relative to the U.S. dollar have on the U.S. company's profit/loss on this transaction? (increase profit, decrease profit, increase loss, decrease loss, or no change on line below)

____________Ans. Why?

1. a) What impact would a depreciation of the Brazilian Real relative to the Japanese Yen have on the U.S. company's profit/loss? ((increase profit, decrease profit, increase loss, decrease loss, or no change on line below)

____________Ans. Why?

1. If exchange rates changed to the exchange rate shown below, state/show the amount of the U.S. company's total profit or loss on the deal now? (Show profit or loss calculation clearly).

USD$ 1 = 150YEN

USD$ 1 = Brazilian Real .40

_________Place word profit or loss on line.

_________Place amount on line.

Show work clearly below: