: Bharat Electronics Limited in Bangalore exports space vehicles to Belgium by importing all the components from south Korea. Imports are invoiced in Hong Kong dollars and exports in Euro. The company is exporting 6000 unit at a pries of Euro 165 per unit. The cost of imported components is HK$ 75. The fixed cost and other variable costs per unit per unit are 1200 and 2500 respectively. The cash flows in foreign currencies are due in six months. The current exchange rates are as follows: f/Euro 59.60/62 /HK$ 5.96/5.98 After six months the exchanges rates (at the time of receipts and payments of foreign currency) turn out as follows: /Euro 60.30/32 /HK$ 6.23/25 You are required to : i. Calculate the loss/gain due to the transaction exposure. ii. Based on the following additional information, calculate the loss/gain due to transaction and operating exposure if the life contracted price of washing marching is 19500. The current exchange rates change to /Euro : 59.85/87 /HK$ 6.00/02 Price elasticity of demand of the product in Germany is estimated as 2.5. Payment and receipts are to be settled/received at the end of six months