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Question
Boeing, Inc. sold an airplane to Singapore Airlines for SGD100 million (Singapore dollars) with terms of one-year payment. The current spot rate $0.25 per SGD. Boeing expects to exchange SGD100 million at next years spot rate when payment is received. If the spot rate for the SGD declines to $0.24 one year from today, what is Boeings potential transaction gain or loss?
a. Transaction gain of $1 million
b. Transaction gain of $2 million
c. Transaction loss of $1 million
d. Transaction loss of $2 million
Answer
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