Problem:
Postal Express has outlets throughout the world. It also keeps funds for transactions purposes in many foreign countries. Assume that in 2010 it held 200,000 reals in Brazil worth 130,000 dollars. It drew 10 percent interest, but the Brazilian real declined 20 percent against the dollar.
a. What is the value of the holdings, based on U.S. dollars, at year-end?
b. What is the value of its holdings, based on U.S. dollars, at year-end if instead it drew 8 percent interest and the real went up by 12 percent against the dollar?