Question
Please urgent help Tomahawk US has a risk sharing agreement with its distributor in Germany. Tomahawk has agreed to receive payments in Euros. For the
Please urgent help
Tomahawk US has a risk sharing agreement with its distributor in Germany. Tomahawk has agreed to receive payments in Euros. For the year 2019, Tomahawk and its distributor have agreed to use $1.3000/ as the base exchange rate. Tomahawk agrees to price all contracts to its German distributor at this exact exchange rate as long as the spot rate on the order date is within 2.5% of this rate. If the spot rate falls outside of this range, Tomahawk will split 50/50 the difference between the new spot rate and the base rate with the distributor.
Required
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- What are the outside ranges within which the distributor must pay at the agreed base exchange rate?
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- If Tomahawk ships its product with an invoice of $5,000 to its distributor in Germany and the exchange rate on the order date is $1.3255/, what is the price in Euros? What is the price (in Euros) if the exchange rate on the order date is $1.3770/?
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