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Williams Corp. is considering signing contracts that will obligate the firm to purchase 105000 Swiss Francs worth of computer equipment at the end of each calendar quarter for the next 2 years. Williams is also signing a contract with a local high school that will purchase this equipment from Williams at a price of $80000 (U.S.) per quarter. What would Williams' profit or loss be over the life of the contract (8 quarters) if the "In US Dollar" exchange rate is $0.82 over the life of the contract?

Respuesta :

Based on the information given, Williams' loss be over the life of the contract will be $48800

The first thing to do is to calculate the profit or loss for each quarter. This will be:

= 80000 - (105000 × 0.82)

= 80000 - 86100

= -6100

The number of quarters over the life is given as 8 quarters. Therefore, the loss over the life of the contract will be:

= 8 × -$6100

= $-48800

Therefore, the loss will be $48800

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