UNIT IV ASSGNMNT MBA 6601
For this assignment, you will practice calculating exchange rates and examine some of the key factors that have an impact on foreign exchange.
Click here to access the Unit IV Assignment worksheet.
Click here to access some exchange-rate examples and practice questions.
MBA 6601, International Business
Unit IV Assignment
Complete Part1 and Part 2 of this assignment, and submit as a single document for grading.
Part 1:
Your company is deciding to expand to the following countries, and you and two other managers will have to visit these countries to set up operations. You have $1,500.00 to convert in each currency. Compute the exchange amount for each, and complete the table.
Country/Currency
USD value for 1 unit of another currency (as of 2/17/16)
Exchange amount
Japanese yen
$0.008754
Euro
$1.1159
British pound
$1.4398
While you are visiting each of these countries, you have to buy supplies and equipment for your operations. You want to determine what it is costing you in U.S. dollars. Utilizing the same exchange rates given above, compute the costs into U.S. dollars, and complete the table:
Japanese yen
Computer 167,000.00
$
Euro
Desks & chairs 1,125.00
$
British pound
Printer 575.00
$
Part 2:
Pedro in Costa Rica wants to purchase some wild Atlantic salmon from Hans in Iceland. The fish are purchased in Icelands currency, the krona. Pedros brother works in a bank and will take care of the transactions free of charge. Pedro has 1,000,000 colons to start with. (There is no transaction fee, and shipping is not calculated at this point.)
How much krona does he have to work with?
Answer:
Country/Currency
USD $ value for 1 unit of another currency (as of 2/17/16)
Euro value for 1 unit of another currency (as of 2/18)
Costa Rica colon CRC
$0.001909
0.001745
Iceland krona ISK
$0.00788
0.007062
The next day Hans decides to purchase some bananas from his new trading partner in Costa Rica. Hans sister works for an import/export agency and can arrange the transaction in euros with no fee. Hans takes all of the krona he received from Pedro and proceeds to convert his currency to colon. (Note, one countrys currency experienced some weakness overnight.)
How much colon does he have to work with? List your steps and the results you achieved with each step. Also, explain some factors that could cause the countrys currency to weaken.
Answer: MBA 6601, International Business
Exchange Rate Examples
Rates table
Country/Currency USD value for 1 unit of another currency
(as of 3/15/16)
Euro() 1.124897
Japanese yen() .008847
Swiss franc() 1.030061
One-step examples
Example 1: Convert $3,000 to euros.
Divide the dollar amount by the given euro rate (1.124897).
$3,000 1.124897 = 2,666.91
Example 2: Convert $3,000 to yen.
Divide the dollar amount by the given yen rate (.008847).
$3,000 .008847 = 339,098
Example 3: Convert 1,500 to U.S. dollars.
Multiply the Swiss franc amount by the given Swiss franc rate (1.030061).
1,500 * 1.030061 = $1,545.09
Example 4: Convert 16,000 to U.S. dollars.
Multiply the euro amount by the given euro rate (1.124897).
16,000 * 1.124897 = $17,998.35
Multiple-step Examples
In some cases, it may take a few steps to calculate the currency since only the most frequently used rates
are provided by financial media. An example would be converting euros to yen. (You do not have to use
this method to complete your assignment if you are familiar with an alternative method.)
Example 5: Convert 3,000 to yen
Step 1: Convert euros to dollars, 3,000 * 1.124897 = $3,374.69
Step 2: Convert dollars to yen, $3,374.69 .008847 = 381,450.32
Example 6: Convert 50,000 to Swiss francs.
Step 1: Convert yen to dollars, 50,000 * .008847 = $442.35
Step 2: Convert dollars to Swiss francs, $442.35 1.030061 = 429.44
Practice
Country/Currency USD value for 1 unit of another currency
Euro() 1.121303
Japanese yen() .008878
British pound () 1.428021
Convert $8,000 into the following currencies:
1. Euros
2. Yen
3. Pounds
Convert the following into U.S. dollars:
4. 1,000
5. 60,000
6. 400
Convert the following:
7. 2,000 to pounds
8. 70,000 to pounds
Note: Solutions are on the following page.
Solutions
1. 7,134.56
2. 901,103.85
3. 5,602.16
4. $1,121.30
5. $532.68
6. $571.21
7. 1,570.43
8. 435.19
