Question

You are an international shrimp trader. A food producer in the Czech Republic offers to pay you 2.1 million Czech koruna today in exchange for a​ year's supply of frozen shrimp. Your Thai supplier will provide you with the same supply for 2.9 million Thai baht today. If the current competitive market exchange rates are 25.29 koruna per dollar and 41.18 baht per​ dollar, what is the value of this exchange to​ you?

Answer 1

Answer:

$12,614.

Explanation:

We have been given that a food producer in the Czech Republic offers to pay you 2.1 million Czech koruna today in exchange for a​ year's supply of frozen shrimp. The current competitive market exchange rates are 25.29 koruna per dollar.

$2.1\text{ million}=2.1\times 1,000,000=210,000$

$\text{The Czech buyer's offer in dollars}=210,000\text{ koruna}\times \frac{\ 1}{\text{25.29 koruna}}$

$\text{The Czech buyer's offer in dollars}=\ 83,036.773428$

$\text{The Czech buyer's offer in dollars}\approx \ 83,037$

$2.9\text{ million}=2.9\times 1,000,000=290,000$

$\text{The Thai buyer's offer in dollars}=290,000\text{ Baht}\times \frac{\ 1}{\text{41.18 Baht}}$

$\text{The Thai buyer's offer in dollars}=\ 70422.5352$

$\text{The Thai buyer's offer in dollars}\approx \ 70,423$

$\text{The value of this exchange}=\ 83,037-\ 70,423$

$\text{The value of this exchange}=\ 12,614$

Therefore, the value of this exchange to you would be $12,614.