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Hi Sir,
regarding part a (i) please explain that how the figures for short term payables (1123) and long term loan stock (1766) are calculated if dinar devalues?If the dinar devalues, then the exchange rate becomes 246.3 x 1.15 – 283.2 dinars to the $.
So 500 dinars (the loan stock) converts to 500M / 283.2 = $1766
The short-term payables are 50% owed in sterling, so only 50% is at risk due to the dinar devaluing. The 50% at risk converts to 296×50% / 283.2 = $523
The other 50% converts to 296×50% / 246.3 = $600
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