Description
Please complete both portions
Knowing that the absolute exchange rate and trends in changing exchange rates can dramatically impact the firm’s profitability, the chief financial officer (CFO) has asked you for a white paper to help determine the best location for outsourcing your product’s manufacturing.
Individual Portion
Write a white paper of 700–1,000 words, plus calculations, that covers the following topics:
- In lay terminology and using no quotes, describe what exchange rates are.
- Why are exchange rates important to a firm’s CFO, investors, and customers?
- Describe and explain at least 3 causes of changing exchange rates.
- Describe the impact of changes in exchange rates on a company’s profitability. Include a numerical example to demonstrate your point.
Please add your file.
Group Portion
After completing the white paper, the CFO told you and your colleagues that the company was considering 4 different countries as possible manufacturing locations for its product, as opposed to continued manufacturing in the United States. Because the chief executive officer's (CEO’s) decision-making style is analytical, the CFO advised you and your colleagues to draft a group white paper.
Write a white paper of 500–700 words, plus calculations, that includes the following:
- Determine, from only an exchange rate perspective, which of the 4 countries would be the better choice and why.
- Use the data below to calculate and determine your answer.
- Include your calculations (Wrong answers will only receive partial credit.).
- Show the numerical calculations of why your chosen country is best.
- Make mention of the trends in these exchange rates (including your reference source) and show graphs or charts.
- Keep in mind that the current exchange rate is an important factor, but so is the trend in exchange rates, which could influence your recommendation. Because the payment will occur sometime in the future, the trend in the rate may cause a different sourcing location to be made.
- Use this Web site to learn about trends in exchange rates and to convert one currency to another.
Assume the following in your calculations:
- The current U.S. manufacturing cost is $10/unit.
Current exchange rates | Current quotes, including freight and other product, transportation, tariff, and insurance costs | |
Mexico | $1 = 12.392 pesos | 150 pesos |
Japan | $1 = 83.6184 yen | 800 yen |
China | $1 = 6.65891 yuan | 68.5 yuan |
India | $1 = 45.23 rupees | 440 rupees |
Please add your file.
Explanation & Answer
kindly find attached. Thank You.
Exchange rates
Thesis statement: this paper addresses questions from both individual and group portions.
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Introduction
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Importance of exchange rates
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Causes of changing exchange rates
•
Impact of changes in exchange rates on the profitability of a company
•
Determine, from only an exchange rate perspective, which of the four countries would be
the better choice and why.
Running head: EXCHANGE RATES
1
Exchange Rates
Student’s Name
Institution
Date
EXCHANGE RATES
2
Introduction
Exchange rate refers to the price for one currency, which is expressed as per another
currency as well as many currencies. To the small open economies like the one for Australia, which
actively takes part in international trade, an exchange rate is an essential variable to the economy.
Movements with an exchange rate affect the individuals' decisions, businesses, along with the
government. Together, this influences inflation, economic activity, together with the balance of
payments. There exist several ways for measuring the exchange rates. For years, also there have
existed several operational arrangements for evaluating the exchange rate for Australia. The dollar
of Australia is currently freely traded as well as is the 5th currency that is most traded at the foreign
exchange markets.
Importance of exchange rates
Apart from factors like interest rates as well as inflation, the rate of exchange for the
currency is among the most significant determinants for the economic health level that is relative
for the country. The rates of Exchange undertake a critical responsibility for the trade in the country
level, which is essential to almost all the free economic in the entire world. Directly, in case the
business ...
