An importer of televisions from Japan has a contract to purchase a shipment of televisions for 2,000,000 yen.The spot rate increases from 105 yen per dollar to 108 yen per dollar.What is the importer's gain or loss?

Question

Quizplus · Accepted Answer

The importer gains $529. Initially, at 105 yen per dollar, the cost in dollars is 2,000,000 / 105 = $19,047.62. When the rate changes to 108 yen per dollar, the cost is 2,000,000 / 108 = $18,518.52. The difference is $19,047.62 - $18,518.52 = $529, which is a gain.

An Importer of Televisions from Japan Has a Contract to Purchase