Question

Atreides International has operations in Arrakis. The balance sheet for this division in Arrakeen solaris shows assets of 50,000 solaris, debt in the amount of 23,000 solaris, and equity of 27,000 solaris.

  

a.	If the current exchange ratio is 1.25 solaris per dollar, what does the balance sheet look like in dollars? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

  

Balance sheet
Assets	$	Debt	$
		Equity
Total assets	$	Total liabilities and equity	$

  

b.

Assume that one year from now the balance sheet in solaris is exactly the same as at the beginning of the year. If the exchange rate is 1.60 solaris per dollar, what does the balance sheet look like in dollars now? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.16.)

  

Balance sheet
Assets	$	Debt	$
		Equity
Total assets	$	Total liabilities and equity	$

  

c.

Assume that one year from now the balance sheet in solaris is exactly the same as at the beginning of the year. If the exchange rate is 1.20 solaris per dollar, what does the balance sheet look like in dollars now? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

  

Balance sheet
Assets	$	Debt	$
		Equity
Total assets	$	Total liabilities and equity	$

Answer 1

a.

Balance sheet will look like the following when exchange rate is 1.25 solaris per dollar.

Balance sheet
Assets	$40,000	Debt (23,000/1.25)	$ 18,400
(50,000 /1.25)		Equity (27,000/1.25)	$21,600
Total assets	$40,000	Total liabilities and equity	$ 40,000

b.

Balance sheet will look like the following when exchange rate is 1.60 solaris per dollar.

Balance sheet
Assets	$31,250	Debt (23,000/1.60)	$ 14,375
(50,000 /1.60)		Equity (27,000/1.60)	$16,875
Total assets	$31,250	Total liabilities and equity	$ 31,250

c.

Balance sheet will look like the following when exchange rate is 1.20 solaris per dollar.

Balance sheet
Assets	$41,666.6667	Debt (23,000/1.20)	$ 19,166.6667
(50,000 /1.20)		Equity (27,000/1.20)	$22,500
Total assets	$41,667	Total liabilities and equity	$ 41,667