INT 220 Module Four Assignment Guidelines and Rubric
Overview
Foreign exchange impacts the profitability of transactions in international markets. It can turn a profitable business into one that loses money and can turn an unprofitable business into one that makes money.
In this assignment, you will analyze the impact of foreign exchange on different business scenarios and present your findings in a short business memo.
Scenario
You manage the international business for a manufacturing company. You are responsible for the overall profitability of your business unit. Your company ships your products to Malaysia. The retail stores that buy your products there pay you in their local currency, the Malaysian ringgit (MYR). All sales for the first quarter are paid on April 1 and use the exchange rate at the close of business on April 1 or the first business day after April 1 if it falls on a Saturday or Sunday. The company has sales contracts with different vendors that determine the number of units sold well in advance. The company is contractually obligated to sell 5,000 units for exactly 1.50 million MYR for the first quarter. The break-even point for each unit is $75 in U.S. dollars. Use the following foreign exchange rates:
- On January 1, the daily spot rate is 3.13 MYR, and the forward rate is 0.317 U.S. dollars per MYR for April 1 of the same year.
- On April 1, the daily spot rate is 3.52 MYR.
Directions
Using the information above, create a short business memo that explains the profitability, viability, and importance of considering foreign exchange on the basis of the scenarios below.
- Scenario 1: The company uses the spot rate on April 1 to convert its sales revenue in MYR to U.S. dollars.
- Scenario 2: On January 1, the company uses that day’s forward rate today to lock in a foreign exchange rate for its expected 1.5 million MYR in sales. This means the company agreed to exchange 1.5 million MYR using the forward rate on January 1 when April 1 arrives.
- Scenario 3: Another option for the company is to spend the foreign currency and avoid any currency exchange. Because it is a manufacturing company, raw materials are always needed.
Specifically, you must address the following rubric criteria:
- Foreign Exchange Calculations: Determine the profitability of the international business by using foreign exchange calculations for the first and second scenarios.
- Spend or Save: Analyze the viability of spending foreign currency to purchase raw materials as a strategy to mitigate foreign exchange risk, considering the factors that determine its feasibility and effectiveness for the company.
- Conclusion: After determining the result for each scenario, make conclusions about the importance to a company’s financial results of foreign exchange risk.
What to Submit
Submit this assignment as a 250- to 300-word Microsoft Word document with double spacing, one-inch margins, and 12-point Times New Roman font. Sources should be cited according to APA style.
AI Usage
If you use gen AI tools to support your work on this assignment, be sure to follow these AI usage guidelines. You must acknowledge your use of these tools in your work. Guidelines on how to cite AI tools can be found in this Shapiro Library guide.
Module Four Assignment Rubric
| Criteria | Exceeds Expectations (100%) | Meets Expectations (85%) | Partially Meets Expectations (55%) | Does Not Meet Expectations (0%) | Value |
|---|---|---|---|---|---|
| Foreign Exchange Calculations | Exceeds expectations in an exceptionally clear, insightful, sophisticated, or creative manner | Determines the profitability of the international business by using foreign exchange calculations | Shows progress toward meeting expectations, but with errors or omissions; areas for improvement may include performing foreign exchange calculations correctly | Does not attempt criterion | 40 |
| Spend or Save | Exceeds expectations in an exceptionally clear, insightful, sophisticated, or creative manner | Analyzes the viability of spending the foreign currency instead of exchanging it | Shows progress toward meeting expectations, but with errors or omissions; areas for improvement may include identifying more elements that can complicate the process of getting raw materials to the company’s factories | Does not attempt criterion | 20 |
| Conclusion | Exceeds expectations in an exceptionally clear, insightful, sophisticated, or creative manner | Makes conclusions about the importance to a company’s financial results of foreign exchange risk | Shows progress toward meeting expectations, but with errors or omissions; areas for improvement may include making conclusions that align with foreign exchange calculations and using the break-even point in analysis | Does not attempt criterion | 20 |
| Clear Communication | Exceeds expectations with an intentional use of language that promotes a thorough understanding | Consistently and effectively communicates in an organized way to a specific audience | Shows progress toward meeting expectations, but communication is inconsistent or ineffective in a way that negatively impacts understanding | Shows no evidence of consistent, effective, or organized communication | 10 |
| Citations and Attributions | Uses citations for ideas requiring attribution, with few or no minor errors | Uses citations for ideas requiring attribution, with consistent minor errors | Uses citations for ideas requiring attribution, with major errors | Does not use citations for ideas requiring attribution | 10 |
| Total: | 100% | ||||