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 U.S.dollar gain or loss in inventory value as a result of the change in exchange rates?
A)−$38,880.00
B)−$43,200.00
C)−$47,520.00
D)−$52,272.00
E)−$57,499.20

Question

Quizplus · Accepted Answer

The initial value in USD was 240,000 pounds * 2 = $480,000. The current value in USD is 240,000 pounds * 1.82 = $436,800. The loss is $480,000 - $436,800 = $43,200.

Suppose One Year Ago,Hein Company Had Inventory in Britain Valued