14-70 If the exchange rate remains constant at $1.60 to £1 throughout the year,sterling revenue from U.K.loans will be
A)£6.25 million.
B)£7.875 million.
C)£7.25 million.
D)£6.625 million.
E)£11.26 million.

Question

Quizplus · Accepted Answer

Since the exchange rate remains constant at $1.60 to £1, we can simply multiply the dollars received by the exchange rate to get the sterling revenue. The dollar revenue from U.K. loans is given as $11.6 million. Multiplying this by the exchange rate gives us:

$11.6 million x 1.60 = £7.36 million

Therefore, the sterling revenue from U.K. loans is £7.36 million or £7.25 million rounded to the nearest £0.01 million. The correct answer is C.

14-70 If the Exchange Rate Remains Constant at $1