Question
Suppose your firm does business in Mauritius. Business done in Mauritius is conducted in Mauritian Rupee (MUR). The spot rate of the Mauritian Rupee is
Suppose your firm does business in Mauritius. Business done in Mauritius is conducted in Mauritian Rupee (MUR). The spot rate of the Mauritian Rupee is USD .037/MUR. Some expect this exchange rate to hold into the next year. Next years projected cash flows follow:
Country | US (USD millions) | Mauritius (MUR millions) |
Sales | 83.0 | 165.0 |
COGS | 5.9 | 871.5 |
Expenses | 31.0 | 51.5 |
Interest | 6.5 | 0 |
Suppose you, however, believe that during the course of the upcoming year, the MUR will APPRECIATE by 10%. If this indeed happens, by approximately how much will your firms USD cash flow change from initial projections?
Group of answer choices"
- USD 28.05 Million
- USD 2.80 Million
+ USD 28.05 Million
It won't change at all
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