CHAPTER 31
EAST COAST YACHTS GOES
INTERNATIONAL
2. If the dollar strengthens, the profit will decline. Conversely, if the dollar weakens, the profit will
increase.
3. The company will pay the sales commission out of gross sales, so the after-commission sales in euros
is:
At the current exchange rate of $1.34/€, the EBT in euros will be converted to dollars in the amount
of:
Dollar EBT = €7,600,000($1.34/€)
Dollar EBT = $10,184,000
East Coast Yachts has production costs equal to 80 percent of dollar sales at this exchange rate. The
total sales in dollars are:
5. At the current exchange rate, the company will make a profit unless the exchange rate moves