What would be safe seat cost

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Reference no: EM131549156

Safe Seats Inc., a US based baby car seat supplier, imports car seats from Lazada Baby Products, a Malaysian supplier, based in Kuala Lumpur. They have had a mutually beneficial long term relationship with each other. Recently, the Malaysian ringgits has fluctuated widely between MYR3.25/$ to MYR4.50/$. Since both the companies wanted to continue their longtime relationship, they have agreed to a risk-sharing arrangement. As long as the spot rate on the date of an invoice is between MYR3.25/$ to MYR4.50/$, Safe Seats will pay based on the spot rate. If the spot rate falls outside this range, they will share the difference equally. This agreement is valid for the next 9 months, at which time they will re-evaluate it. Safe Seat has recently placed an order to import car seats from Lazada for MYR 4,000,000 and the current spot rate of MYR4/$. If there was no risk-sharing agreement, what would be Safe Seat Cost?

Reference no: EM131549156

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