Final answer:
The import and sale of computer motherboards are affected by exchange rate changes. The company's profits will vary with a 10% rise or fall in exchange rates, and determining the break-even point involves exchange rate calculations. Movements in exchange rates like those between the USD and JPY can stress economies and alter international trade plans.
Step-by-step explanation:
The question pertains to exchange rate fluctuations and their impact on a company's profit from the import and sale of goods, specifically computer motherboards. Calculating profits based on the changing exchange rates involves understanding the buy and sell prices in different currencies and the exchange rate between those currencies.
The company imports motherboards at a cost of SGD 218.50 each and plans to sell them for USD 175 each. If the exchange rate changes by 10% over the next 90 days, the cost in U.S. dollars would increase or decrease accordingly, affecting the profit margin. The break-even exchange rate would be the rate at which the company neither makes a profit nor incurs a loss on the transaction. This requires calculating the total cost in SGD, converting it to USD using the current exchange rate, and then determining the break-even point against the selling price.
It is important to note that exchange rate movements can significantly impact businesses, as shown by the historical USD/YEN exchange rate. Movements in exchange rates can cause stress on both economies and necessitate changes in export and import plans for firms involved in international trade.