The value of the holdings of Megahurtz International Car Rentals at year end is CA$176,923.08
The value of the holdings if the real went up against the dollar is $266, 667. 67.
<h3>How to find the value of the holdings?</h3>
The exchange rate before the real declined was:
= 270,000 / 200, 000
= 1.35 real per dollar
The new exchange rate after the Real declined was:
= 1.35 x 1.3
= 1.755 Real per dollar
The value of the holdings at year end in Real will therefore be:
= 270, 000 x 1.15
= 310, 500 Real
In Canadian dollar this is:
= 310, 500 / 1.755
= CA$176,923.08
The new exchange rate as a result of the Real increasing in value is:
= 1.35 x (1 - 16% increase in value)
= 1.134 Real per dollar
The value of the holdings at year end would therefore be:
= 270,000 x (1 + 12% earning)
= 302, 400 Reals
In Canadian Dollar this is:
= 302, 400 / 1.134
= CA$266, 666. 67
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