Engaging in international transactions


Please give some thought to how the company can make money or lose money by simply engaging in international transactions. The net sales figures from the European region are as followed:

Year 1 sales = 125 million euros
Year 2 sales = 150 million euros
Year 3 sales = 175 million euros
Year 4 sales = 200 million euros
Year 5 sales = 250 million euros

The forecasted exchange rate for euros to U.S. dollars is between 0.40 to 1.20 (which is 0.40 euros/US$1 to 1.20 euros/US$1), and the current exchange rate is 1 euro for US$1.

use these two extreme points to analyze how European revenue would translate to U.S. dollars over the 5-year time period.

Explain the forecasted direction for exchange rates and what that means to the company's revenue and profits.

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Finance Basics: Engaging in international transactions
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