Suppose one year ago, Hein Company had inventory in Britain valued at 240,000 pounds.The exchange rate for dollars to pounds was 1£ = 2 U.S.dollars.This year the exchange rate is 1£ = 1.82 U.S.dollars.The inventory in Britain is still valued at 240,000 pounds.What is the gain or loss in inventory value in U.S.dollars as a result of the change in exchange rates?
A)-$240,000
B)-$43,200
C)$0
D)$43,200
E)$47,473

Question

Quizplus · Accepted Answer

The inventory value in U.S. dollars last year was 240,000 pounds * 2 = $480,000. This year, it is 240,000 pounds * 1.82 = $436,800. The loss in value is $480,000 - $436,800 = $43,200.

Suppose One Year Ago, Hein Company Had Inventory in Britain