Problem:
Your Boston headquartered manufacturing company, Wruck Enterprises, obtained a 50 million-peso loan from a Mexico City bank last month to fund the expansion of your Monterrey, Mexico plant. When you took out the loan the exchange rate was 10 US cents per peso, but since then, the exchange rate has dropped to 9 US cents per peso.
Required:
Question 1: Has Wruck Enterprises made a gain or loss due to the exchange rate change, and how much? Note that your shareholders live in the US. Explain in detail and also show all work please provide step by step solution.