Question

Tee Time Golf Resort plans to use famous Kauri wood from New Zealand for parts of the interior of the magnificent clubhouse at its new golf resort near Salem, OR. According to the importer, each 10-foot slab will cost Tee Time approximately $5,000. Looking at the exchange rates, Tee Time's finance director noted that $500 US dollars = $738 NZ dollars. The importer will order directly from his source in New Zealand. Tee Time's finance director has determined that
A. there will be a shortage of the wood.
B. it will cost less when the exchange rate of U.S. dollars to NZ dollars is just about equal.
C. it's a good time to buy the wood.
D. it's not a good time to buy the wood.

Answer 1

Answer: C. it's a good time to buy the wood.

Explanation:

$500 = 738NZ dollars, therefore 738 NZ dollar ÷ $500 = 1.476NZ dollar

The current exchange rate is $1 = 1.476NZ dollar

10 foot slab costs $5000, Tee Golf Resort will pay $ 3387.53 ($5000/1.476NZ)

if they import wood from New Zealand. Tee Golf Resort will pay less than $5000 if they import Wood from New Zealand at the current exchange rate. This is a Good time for them to import woods