Homework: Chapter 12 Homework Question 1, Problem 12-2 (book/static) Part 1 of 2 Acuña Leather Goods. DeMagistris Fashio

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Homework Chapter 12 Homework Question 1 Problem 12 2 Book Static Part 1 Of 2 Acuna Leather Goods Demagistris Fashio 1 (57.62 KiB) Viewed 41 times

Homework Chapter 12 Homework Question 1 Problem 12 2 Book Static Part 1 Of 2 Acuna Leather Goods Demagistris Fashio 2 (49.51 KiB) Viewed 41 times

Homework Chapter 12 Homework Question 1 Problem 12 2 Book Static Part 1 Of 2 Acuna Leather Goods Demagistris Fashio 3 (49.51 KiB) Viewed 41 times

Homework: Chapter 12 Homework Question 1, Problem 12-2 (book/static) Part 1 of 2 Acuña Leather Goods. DeMagistris Fashion Company, based in New York City, imports leather coats from Acuñia Leather Goods, a reliable and longtime supplier, based in Buenos Aires, Argentina. Payment is in Argentine pesos. When the peso lost its parity with the U.S. dollar in January 2002, it collapsed in value to Ps4.0/$ by October 2002. The outlook was for a further decline in the peso's value. Since both DeMagistris and Acuña wanted to continue their longtime relationship, they agreed on a risk-sharing arrangement. As long as the spot rate on the date of an invoice is between Ps3.5/$ and Ps4.5/$, DeMagistris will pay based on the spot rate. If the exchange rate falls outside this range, they will share the difference equally with Acuña Leather Goods. The risk-sharing agreement will last for six months, at which time the exchange rate limits will be reevaluated. DeMagistris contracts to import leather coats from Acuñia for Ps8,000,000 or $2,000,000 at the current spot rate of Ps4.0/$ during the next six months. a. If the exchange rate changes immediately to Ps6.0/5, what will be the dollar cost of six months of imports to DeMagistris? b. At Ps6.0/$, what will be the peso export sales of Acuña Leather Goods to DeMagistris Fashion Company? View an example Etext pages HW Score: 0%, 0 of 10 points O Points: 0 of 3 a. If the exchange rate changes immediately to Ps6.0/5, what will be the dollar cost of six months of imports to DeMagistris? (Round to the nearest dollar) CETTE Financial calculator Save Clear all Check answer

111 Homework: Chapter 12 Homework Question 1, Problem 12-2 (book/static) Part 1 of 2 Acuña Leather Goods. DeMagistris Fashion Company, based in New York City, imports leather coats from Acuña Leather Goods, a reliable and longtime supplier, based in Buenos Aires, Argentina. Payment is in Argentine pesos. When the peso lost its parity with the U.S. dollar in January 2002, it collapsed in value to Ps4.0/5 by October 2002. The outlook was for a further decline in the peso's value. Since both DeMagistris and Acuñia wanted to continue their longtime relationship, they agreed on a risk-sharing arrangement. As long as the spot rate on the date of an invoice is between Ps3.5/5 and Ps4.5/5, DeMagistris will pay based on the spot rate. If the exchange rate falls outside this range, they will share the difference equally with Acuñia Leather Goods. The risk-sharing agreement will last for six months, at which time the exchange rate limits will be reevaluated. DeMagistris contracts to import leather coats from Acuñia for Ps8,000,000 or $2,000,000 at the current spot rate of Ps4.0/5 during the next six months. a. If the exchange rate changes immediately to Ps6.0/5, what will be the dollar cost of six months of imports to DeMagistris? b. At Ps6.0/5, what will be the peso export sales of Acuña Leather Goods to DeMagistris Fashion Company? View an example Etext pages HW Score: 0%, 0 of 10 points O Points: 0 of 3 a. If the exchange rate changes immediately to Ps6.0/5, what will be the dollar cost of six months of imports to DeMagistris? $(Round to the nearest dollar) CETTE Financial calculator Save Clear all Check answer