Suppose DeGraw Corporation, a U.S. exporter, sold a solar heating station to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar. In order to close the sale, DeGraw agreed to be paid in yen, thus agreeing to take some exchange rate risk for thetransaction. The terms were net 6 months.

a. If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would DeGraw receive after it exchanged yen for U.S. dollars?

b. What is the difference (in dollars) between what DeGraw could have received had they asked for payment immediately (before the devaluation of the yen) instead of six months later?

a.

$1 = 140 Yen

1Yen = $1 / 140

= $0.00714

$1 = 154.4 Yen

1 Yen = 1/ 154.4

= $0.006476

1 Yen = $0.006476

143,500,000 Yen = ?

(143,500,000 * $0.006476) / 1 = $929,404

b. ?