Assume That You Manage a Firm That Faces Transaction Exposure

Assume that you manage a firm that faces transaction exposure. Your company manufactures and sells tricycles around the world. You just completed a large sale of tricycles to a chain of stores in Sweden and received a promised payment of 1,000 krona per tricycle. You have already sold 3,000 tricycles and are now awaiting payment. The exchange rate today is 7.5 krona per dollar. Over the next ninety days the indirect exchange rate unexpectedly moves from 7.5 to 7.7. What will be your sales receipt in krona, and what amount of dollars will these kronas convert to at the indirect exchange rate?

A) 3,000,000 kronas and about 400,000 dollars
B) 3,000,000 kronas and about 389,610 dollars
C) 3,176,529 kronas and about 389,610 dollars
D) 3,000,000 kronas and about 300,000 dollars