Unlock Your Potential with Dell's Dollar Profit Exposure!

How can Dell's dollar profit exposure be calculated when the passthrough is -0.8?

a. exposure =€24.75 million b. exposure =€71.69 million c. exposure =€32.19 million d. exposure =126.09 million

The exposure for Dell's dollar profit, when the pass through is -0.8, amounts to €24.75 million. This confirms that option (a) is correct.

When calculating Dell's dollar profit exposure with a passthrough of -0.8, the exposure is determined by the formula: Exposure = Passthrough × Profit in dollars / Spot exchange rate.

Given the values of -0.8 for passthrough, $25 million for profit in dollars, and €1.45/$ for the spot exchange rate, the calculation is as follows:

Exposure = -0.8 × $25 million / €1.45/$ = -550,000,000 €/$

Therefore, the exposure for Dell's dollar profit, when the passthrough is -0.8, is €24.75 million. This negative exposure indicates that Dell is at risk of loss from changes in the exchange rate.

It's important for companies like Dell to carefully manage their exposure to currency fluctuations to protect their profits and financial stability.