Suppose your company imports computer motherboards from Singapore. You have just placed an order for 40,000 motherboards at a cost to you of 143.80 Singapore dollars each. You will pay for the shipment when it arrives in 30 days. You can sell the motherboards for $138 each. The current exchange rate is S$1.1475/$. What is your profit at the current exchange rate?
What is your profit if the exchange rate goes up by 10 percent prior to the shipment's arrival?
What is your profit if the exchange rate goes down by 10 percent prior to the shipment's arrival?