Assume that on September 1, 2021, Stars & Stripes Ltd. a U.S. company, makes a...
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Assume that on September 1, 2021, Stars & Stripes Ltd. a U.S. company, makes a sale of computers to Indra Ltd. a Spanish customer. The sales price is $1,500,000. Indra agrees to pay in Euros on October 2, 2021. Assume that the spot rate as of September 1, 2021, is US$1.50 = 1 Euro.
(a) Assume that on October 2, 2021, the spot rate is 1 Euro = US$1.48. What is the gain or loss to Stars & Stripes Ltd. if Indra settles on October 2, 2021?
(b) Assume that on October 2, 2021, the spot rate is 1 Euro = US$1.55. What is the gain or loss to Stars & Stripes Ltd. if Indra settles on October 2, 2021?
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