Assume thata U.S. company had purchased merchandise for 1,000 pounds from a British company when the exchange rate was $1.29 per British pound. Thus, $1,290 must be exchanged for $1,000 to make the purchase.

We can analyze all transactions with foreign companies in the same manner as the example above. Assume that a sale is made by a U.S. companyto a Swiss company. The Swiss company was billed in Swiss francs when the exchange rate was $.25 per Swiss franc. How many Swiss francs would be required to pay this invoice if the total in U.S. dollars is $1,000?