Solved: What would be profits or loss from sales of jetta in us, Operation Management

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What would be profits or loss from sales of jetta in us

Assignment:

Jetta production cost in 2002 and 2003 was 14,000 Euro per Jetta. Jetta sold in US at $15,000 in 2002 and 2003. Forward hedge exchange rate was 1 $/Euro in 2003. Rate without hedge (i.e. market exchange rate) was 1.25$/Euro in 2003. If 10,000 Jetta were sold in US, in 2003, by 70% forward hedge and 30% not hedged. What would be profits or loss from sales of 10,000 Jetta in US? The answer is loss of 2.4 million why?

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Operation Management: What would be profits or loss from sales of jetta in us

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