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Levart [38]
3 years ago
9

Assume the spot rate of the British pound is $1.73. The expected spot rate 1 year from now is assumed to be $1.66. What percenta

ge depreciation does this reflect?
Business
1 answer:
Alexandra [31]3 years ago
8 0

Answer:

The correct answer is 4.05%.

Explanation:

According to the scenario, the given data are as follows:

Spot rate = $1.73

Expected spot rate after 1 year = $1.66

So, we can calculate the depreciation percentage by using the following formula:

Expected Depreciation = (Expected spot rate after 1 year - Spot rate) / Spot rate

So, by putting the value

= ($1.66 – $1.73) / $1.73

= - $0.07 / $1.73

= - 4.05%

Hence, the depreciation percentage is 4.05%.

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2 years ago
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