Many financial newspapers or websites say that the U.S. dollar is the strongest currency in the world. Think about the factors that affect exchange rates and make a case that our currency should or should not be the strongest. In your opinion, what are the advantages to having a strong currency versus a weak currency?

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For this assignment, you will practice calculating exchange rates and examine some of the key factors that have an impact on foreign exchange. Complete Part1 and Part 2 of this assignment, and submit as a single document for grading.

Part 1:
Your company is deciding to expand to the following countries, and you and two other managers will have to visit these countries to set up operations. You have $1,500.00 to convert in each currency. Compute the exchange amount for each, and complete the table.

Country/Currency USD value for 1 unit of another currency (as of 2/17/16) Exchange amount
Japanese yen $0.008754 Ұ
Euro $1.1159 €
British pound $1.4398 £

While you are visiting each of these countries, you have to buy supplies and equipment for your operations. You want to determine what it is costing you in U.S. dollars. Utilizing the same exchange rates given above, compute the costs into U.S. dollars, and complete the table:

Japanese yen Computer Ұ167,000.00 $
Euro Desks & chairs €1,125.00 $
British pound Printer £575.00 $

Part 2:
Pedro in Costa Rica wants to purchase some wild Atlantic salmon from Hans in Iceland. The fish are purchased in Iceland’s currency, the krona. Pedro’s brother works in a bank and will take care of the transactions free of charge. Pedro has 1,000,000 colons to start with. (There is no transaction fee, and shipping is not calculated at this point.)

How much krona does he have to work with? 


Country/Currency USD $ value for 1 unit of another currency (as of 2/17/16) Euro € value for 1 unit of another currency (as of 2/18)
Costa Rica colon CRC $0.001909 €0.001745
Iceland krona ISK $0.00788 €0.007062

The next day Hans decides to purchase some bananas from his new trading partner in Costa Rica. Han’s sister works for an import/export agency and can arrange the transaction in euros with no fee. Hans takes all of the krona he received from Pedro and proceeds to convert his currency to colon. (Note, one country’s currency experienced some weakness overnight.)

How much colon does he have to work with? List your steps and the results you achieved with each step. Also, explain some factors that could cause the country’s currency to weaken.


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