In May 1995 when the exchange rate was 80 yen per dollar,Japan Life Insurance Company invested ¥800,000,000 in pure-discount U.S.bonds.The investment was liquidated one year later when the exchange rate was 110 yen per dollar.If the rate of return earned on this investment was 46 percent in terms of yen,calculate the dollar amount that the bonds were sold at.

Question

Quizplus · Accepted Answer

The initial investment in dollars was ¥800,000,000 / 80 = $10,000,000. A 46% return in yen means the investment grew to ¥800,000,000 * 1.46 = ¥1,168,000,000. At the exchange rate of 110 yen per dollar, the dollar amount is ¥1,168,000,000 / 110 = $10,618,181.82, which rounds to $10,618,000.

In May 1995 When the Exchange Rate Was 80 Yen