Question

Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.2871 S$/US$. You have just placed an order for 34,000 motherboards at a cost to you of 233.50 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $194 each.
What is your profit at the current exchange rate? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

Explanation:

the value of 1 Singapore dollar = 1/1.2871 = US$0.776940409  this is called direct quotation

or

Value of US$1 = 1.2871 this is called direct quotation

In the question we have indirect quotation

First we need to calculate Singapore dollar For purchases = 34000*233.5

                                                                                                  = 7939000

Sale proceeds in US$ =34000*194 = $US 6596000

Using the direct quotation method to convered the USD in to Sigapore $

$1usd = 1.2871

Sale proceeds in Singapore dollar =6596000*1.2871 =            8489711.6

Using the indirect quotation method to convered the USD in to Sigapore $

6596000/0.77694       =8489711.6 indirect Calculation

Gain = Sale - purchase =7939000-8489711.6

Gain =550711.6