M4A1 Short Paper: Management Decision- Foreign Exchange Rates

M4A1 Short Paper: Management Decision- Foreign Exchange Rates

Project description
What is a practical application of foreign exchange rate forecasting?
In effect, this is a math question. It is a do now or do later decision. At play is the foreign exchange rate today for the U.S. Dollar to the Japanese Yen compared to

the forecasted rate in the future. Also at play is the interest rate you would need to pay if you wished to postpone the conversion of dollars to yen.
How much is 400K yen worth in dollars today? How much is it worth 6 months from now? How much would I pay in interest if I had to wait?
Answer Question 4 (You manufacture wine goblets. In mid-June you receive an order for 10,000 goblets from Japan. Payment of Y400,000 is due in mid-December. You expect

the yen to rise from its present rate of $1 = Y130 to $1 = Y100 by December. You can borrow yen at 6 percent a year. What should you do?)
To facilitate your response, you could use Excel (which is the most common analytical tool used by international business persons all around the world a U.S. export).

Whether or not you use Excel, you must support you answer by showing the math which lead you to that course of action.
You will prepare a two-page Management Decision paper answering the above question. The concepts will be constructed from the textbook (there are concrete answers).

The implications will include your own opinions based on what you have read and analyzed.

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