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What is the dollar cost of american

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Reference no: EM132626894

Scenario: Checklist: Solve the problem 

American Corporation purchased mechanical parts from a Mexican manufacturer. American Corp. will have to pay 200 million Mexican Pesos for the goods today. 

  • If the spot rate today is MP10/$. What is the dollar cost of American, Corp.'s payable?
  • If the spot rate changed to MP9/$ how would that effect on the cost of the mechanical parts.
  • If the intent for American Corp. is to immediately resell these parts for $25 million what is the impact of the exchange rate on profitability?
  • Show your initial calculations based upon the initial spot rate versus the changed spot rate.
  • Show the calculations regarding the sale price (USD) and the impact of the exchange rate on profitability and explain why.

Reference no: EM132626894

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