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EXCHANGE GAINS AND LOSSES You are the vice president of International InfoXchange, headquartered in Chicago, Illinois. All shareholders of the firm live in the United

EXCHANGE GAINS AND LOSSES

You are the vice president of International InfoXchange, headquartered in Chicago, Illinois. All shareholders of the firm live in the United States. Earlier this month you obtained a loan of 5 million Canadian dollars from a bank in Toronto to finance the construction of a new plant in Montreal. At the time the loan was received, the exchange rate was $1.04 to the Canadian dollar. By the end of the month, it has unexpectedly dropped to 94 cents. Has your company made a gain or loss as a result, and by how much?

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