Kind of exchange rate gain

Reference no: EM131007438

The Greenbay Motor Company ordered six German-built engines at :15,000 each when the direct exchange rate was $1.2500 per euro and elected not to cover the obligation with a forward contract. When the bill was due three months later, the rate was $1.1500. Greenbay's marginal tax rate is 40%.

a. How much was the exchange rate gain or loss on the deal?

b. What kind of exchange rate gain or loss was it?

c. What was the tax impact?

Reference no: EM131007438

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