Suppose Dow Chemical receives quotes of $0.008369-71 for the yen and $0.03665-9 for the Taiwan dollar...

Suppose Dow Chemical receives quotes of $0.008369-71 for the yen and $0.03665-9 for the Taiwan dollar what is the yen cost to dow chemical of buying NT$80 Million.

A. ¥350.2560 Million

A. ¥350.7229 Million

A. ¥79.9128 Million

A. ¥79.9809 Million

Solutions

Expert Solution

1 Yen = $0.008369 to $0.008371

1 New Taiwan Dollar (NT$) = $ 0.03665 to $0.03669

Now cost calculation for NT$ 80 Million:

Case 1: when 1 NT$ = 0.03665 $ (Minimum value in the range offered)

Value of NT$ 80 = 80 *0.03665 = $ 2.932 Million

Case 2: when 1 NT$ = 0.03669 $ (Maximum value in the range offered)

Value of NT$ 80 = 80*0.03669 = $ 2.9352 Million

Since we always try to minimize cost hence take the minimum value of NT$ 80 Million

Take NT$80 Million = $2.932 Million

Now convert it to Yen.

Case 3: 1 yen = $0.008369 à 1 $ = 1/0.008369

Case 4: 1 Yen = $0.008371 à 1 $ = 1/0.008371

Again since we try to minimize cost hence take the value which give minimum cost

Take 1 $ = 1/0.008371, multiply this with $ 2.932 Million to get value of 80 Million NT$ in terms of yen

We get NT$80 Million = $ 2.932 Million = 2.932 X( 1/0.008371) = 350.2568 Million yen

NT$80 Million = 350.2568 Million yen (aprox)

jeff jeffy answered 1 year ago

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