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Answer to Question #10992 in Finance for strongheartblue

Question #10992
Suppose one year ago, Hein Company had inventory in Britain valued at 240,000 pounds. The exchange rate for dollars to pounds was 1£ = 2 U.S. dollars. This year the exchange rate is 1£ = 1.82 U.S. dollars. The inventory in Britain is still valued at 240,000 pounds. What is the gain or loss in inventory value in U.S. dollars as a result of the change in exchange rates?
Expert's answer
Previous value of inventories in dollars: 240000*2=480000$.

Current value of inventories in dollars: 240000*1.82=436800$

As we see, company experienced a loss of 480000-436800=43200$.

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