Orbital Communications has operating plants in over 100 countries. It also keeps funds for transaction purposes in many foreigh countries. Assume tha tin 2010 it held 100,000 kronas in Norway worth $35,000. The funds drew 12 percent interest, and the krona increased 6 percent against the dollar. What was the value of the holdings based on U.S. dollars, at year-end?

To calculate the value of the holdings based on U.S. dollars at year-end, we need to consider the interest earned and the change in exchange rate between the krona and the dollar.

First, let's calculate the interest earned on the 100,000 kronas at a rate of 12 percent. The interest earned would be:

Interest = Principal * Rate
Interest = 100,000 kronas * 0.12 = 12,000 kronas

Next, let's calculate the new value of the 100,000 kronas after a 6 percent increase in the exchange rate. The new value would be:

New Value = Principal + Interest + (Principal * Rate of Increase)
New Value = 100,000 kronas + 12,000 kronas + (100,000 kronas * 0.06)

Now, let's convert the new value from kronas to dollars using the initial exchange rate of 1 krona = $0.35:

New Value in Dollars = New Value * Exchange Rate
New Value in Dollars = (100,000 + 12,000 + (100,000 * 0.06)) * $0.35

Calculating this:

New Value in Dollars = 112,000 kronas * $0.35 = $39,200

Therefore, the value of the holdings based on U.S. dollars at the end of the year would be $39,200.

To calculate the value of the holdings in U.S. dollars at year-end, we need to consider two factors: the interest earned on the funds and the change in exchange rates.

Step 1: Calculate the interest earned on the funds:
The funds drew 12 percent interest. To calculate the interest earned, multiply the principal amount by the interest rate:
Interest = Principal Amount * Interest Rate
Interest = $35,000 * 0.12
Interest = $4,200

Step 2: Calculate the change in exchange rates:
The krona increased by 6 percent against the dollar. To calculate the new exchange rate, we need to add the percentage change to 1.0:
New Exchange Rate = 1 + Percentage Change
New Exchange Rate = 1 + 0.06
New Exchange Rate = 1.06

Step 3: Calculate the value of the holdings in U.S. dollars at year-end:
Value of Holdings = Principal Amount * (1 + Interest Rate) * New Exchange Rate
Value of Holdings = $35,000 * (1 + 0.12) * 1.06
Value of Holdings = $35,000 * 1.12 * 1.06
Value of Holdings = $42,112

Therefore, the value of the holdings based on U.S. dollars at year-end is $42,112.

Orbital Communications has operating plants in over 100 countries. It also keeps funds for transactions purposes in many foreign countries. Assume in 2010 it held 150,000 Kronas in Norway worth $40,000. The funds drew 13 percent interest, and the krona increased 6 percent against the dollar.

What is the value of the holdings, based on U.S. dollars, at year-end?
(Hint: Multiply $40,000 times 1.13 and then multiply the resulting value by 106 percent)

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