1) A U.S. importer has agreed to purchase 500 bottles of cachaça (a type of rum)...

A U.S. importer has agreed to purchase 500 bottles of cachaça (a type of rum) from Brazil at a price of 75 BRL (Brazilian reals) each. The cachaça will take five months to bottle, label, and ship, and payment is due before the rum is shipped. Assume the current spot rate is 3.756 BRL is equal to 1 USD. What is the price in USD to the importer if the spot rate remains unchanged?

	A.	$140,850.00
	B.	$125.243.50
	C.	$25,678.30
	D.	$9,984.03

A U.S. importer has agreed to purchase 500 bottles of cachaça (a type of rum) from Brazil at a price of 75 BRL (Brazilian reals) each. The cachaça will take five months to bottle, label, and ship, and payment is due before the rum is shipped. Now assume the spot rate is 3.458 BRL is equal to 1 USD. What is the price in USD to the importer if the spot rate remains unchanged?

	A.	$10,844.42
	B.	$125.243.50
	C.	$25,678.30
	D.	$140,850.00

Solutions

Expert Solution

Q-1)

Total Import cost of cachaça in brazillian reals = 500 bottles*75 BRL = 37,500 BRL

Current Spot rate = 3.756 BRL per USD

Spot price will remain unchanged by the time payment is due.

Payment in USD = 37,500 BRL*(1/3.756 BRL per USD)

Payment in USD = $9984.03

Option D

Q-2)

Total Import cost of cachaça in brazillian reals = 500 bottles*75 BRL = 37,500 BRL

Current Spot rate = 3.458 BRL per USD

Spot price will remain unchanged by the time payment is due.

Payment in USD = 37,500 BRL*(1/3.458 BRL per USD)

Payment in USD = $10,844.42

Option A

jeff jeffy answered 2 years ago

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