Question

Solartech Corporation, a U.S. exporter, sold a solar heating station to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar. In order to close the sale, Solartech agreed to make the bill payable in yen, thus agreeing to take on exchange rate risk for the transaction. The terms were net 6 months. If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would Solartech actually receive after it exchanged yen for U.S. dollars

Answer 1

Answer:

$929404.14

Explanation:

Given;

Selling cost of the heating station = 143.5 million yen

Exchange rate = 140 yen per dollar

The exchange rate after 6 months = 154.4 yen per dollar

The amount to be received = $\frac{\textup{Amount in yen}}{\textup{Exchange rate}}$

or

The actual amount received = $\frac{143.5\times1000,000}{154.4}$

or

The actual amount received = $929404.14