Exchange Gain or Loss. Bonjur, Inc. imports French cheeses for distribution in the US.
On April 1, the company purchased cheese costing 400,000 euros. Payment is due in euros on July 1. The spot rate on April 1 was $1.20 per euro, and on July 1, it was $1.25 per euro.
(a) How much would Bonjur have to pay in dollars for the purchase if it paid on April 1?
(b) How much would Bonjur have to pay in dollars for the purchase if it paid on July 1?
(c) If Bonjur paid for the purchase using the July 1 spot rate, what would be the exchange gain or loss?