An American factory needs to buy special tools which are made only by companies in either Switzerland or Britain. The tools made in Switzerland cost 100 francs apiece; the ones made in Britain cost 100 pounds each. Based on the exchange rates below, what should the factory do?
U.S. Dollar Comparison
$1.00 U.S. = 0.80 Swiss Francs
$1.00 U.S. = 0.67 Pounds
A) Buy the tools from Britain.
B) Make the tools themselves.
C) Wait until the exchange rate gets better. *
D) Buy the tools from Switzerland.
Yes, A is right.
if that isn't right someone please help me find the answer instead of saying "incorrect" thank you.
You could wait a long time before you could get a better exchange rate.
100 * 0.8 = $80 each
100 * 0.67 = $67 each
Okay, so the answer is A then? I did that math but didn't pick A because I thought "it couldn't be that simple" :P
To determine the best option for the American factory, we need to compare the costs of the tools made in Switzerland and Britain in terms of U.S. dollars. Let's calculate the costs:
1. Tools made in Switzerland:
- Cost per tool: 100 francs
- Conversion rate: $1.00 U.S. = 0.80 Swiss Francs
- Cost per tool in U.S. dollars: 100 francs * ($1.00 U.S. / 0.80 Swiss Francs) = $125.00
2. Tools made in Britain:
- Cost per tool: 100 pounds
- Conversion rate: $1.00 U.S. = 0.67 Pounds
- Cost per tool in U.S. dollars: 100 pounds * ($1.00 U.S. / 0.67 Pounds) = $149.25
Now, let's analyze the options:
A) Buy the tools from Britain: The cost per tool from Britain is $149.25, which is higher than the cost from Switzerland ($125.00). Therefore, buying the tools from Britain would be more expensive.
B) Make the tools themselves: The question doesn't provide any information about the factory's capabilities or costs associated with producing the tools. Without more information, we cannot determine if this is a feasible or cost-effective option.
C) Wait until the exchange rate gets better: Waiting for exchange rates to improve might be a viable option, but it is uncertain how long it will take for the rates to change. This option depends on the fluctuation of exchange rates in the future and cannot be determined solely based on the given information.
D) Buy the tools from Switzerland: The cost per tool from Switzerland is $125.00, which is lower than the cost from Britain ($149.25). Therefore, buying the tools from Switzerland would be more cost-effective compared to buying them from Britain.
Based on the calculations, the best course of action for the American factory would be to choose option D) and buy the tools from Switzerland as they offer a lower cost per tool in U.S. dollars.