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AFP CTP Question # 179 Topic 18 Discussion

CTP Exam Topic 18 Question 179 Discussion:
Question #: 179
Topic #: 18

A company agrees to pay ¥10,000,000 for a shipment from Japan. At the time the purchase order is placed the exchange rate is ¥168/US$. At the time of payment the exchange rate is ¥163/US$. What is the net effect on the dollar cost of the shipment if the transaction has NOT been hedged?


A.

An increase of $5,000


B.

An increase of $1,825


C.

A decrease of $5,000


D.

A decrease of $1,825


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