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DIRECTIONS for the question:
Study the following Graph & table given below and answer the question that follows.
The following table shows the exchange rates and interest rates of currency of various countries.



CAFECAFE Ltd., takes a loan of 0.1 million BRL (Brazilian Real) on 2nd March 2003 for one year from Brazil. It then purchases the coffee seeds from the local market at the rate of 4 BRL per kg of all the borrowed amount, spends US$ 1000 on transportation and refines the seeds in a plant in United States. It gets 0.8 kg of refined coffee for each kg of coffee seed. Refining costs US$ 3 per kg of coffee seed. The Company then sells the refined coffee in the market all over the world.
Q. Which of the following transactions gives the maximum profit? (Use the currency rates and interest rates as on 2nd March 2004)
1. Take a loan of 0.05 million NIS(New Sheqel) from Israel then change half the amount to MXN(Mexican Peso)and invest it at the rate of 5% per annum for one year in Mexico and change the  rest amount to HUF(Hungarian Forint) and invest it at the rate of 7% per annum for one year in Hungary.
2. Take a loan of 0.05 million EGP(Egyptian Pound) from Egypt change in INR(Indian Rupees) and invest it at the rate of 19.9% per annum for one year in India.
3. Take a loan of 0.05 million KRW(South Korean Won) and invest the amount in 5 equal parts in Indonesia, Taiwan, Venezuela, Russia and Turkey at the rate of 1%, 2%, 3%, 4% and 5% respectively.
  • a)
    Transaction 1
  • b)
    Transaction 2
  • c)
    Transaction 3
  • d)
    All three transactions have the same profit.
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
DIRECTIONS for the question:Study the following Graph & table give...
Transaction I: 
Loan + Interest given (in NIS)
= 0,05 x 1.o1
= 0.0505 million NIS
= US$ (O. 0505/4.33) million
Now. 0.025 million NIS
= US$ (0,025/4.33) million
= (0.025 x 11.1)/4.33 million MXN
Output from Mexico
= (0.025 X 11.1 x 1.05)/4.33 million MXN
= US$ (0.025 * 1.05)/4.33 million.
Now, 0.025 million NIS
= US$ (0.025/4.33) million
= (0.025x 1.84)/4.33 million
HUF Output from Hungary
= (0.025 x 184 x 1.07)/4.33 million HUF
= US$ (0.025 x 1.07)/4.33 million
Transaction II:
Loan + Interest given (in EGP)
= 0.05 x 1.009
= 0.05495 million EGP
=US$ (0.05495/5.81) million
= (0.05 *43.6) / 5.8l million INR
Output from India = (0.05 x 43.6 x 1.199 )/5.81 million INR = (0.05 x 1.199)/5.81 = US$(0.05995/5.81) million.
Transaction III:
Loan + Interest given (in KRW)
= 0.05 x 1.0355 
= 0.051775 million KRW
= US$ (0.051775/1008) million
0.01 million KRW
= US$ (0.0l/l008) million
= (0.01 x 9284)/1008 million IDR
Output from Indonesia
= (0.01 x 9284 x 1.01)/1008 million IDR
=US$( 0.0101/1008)
Again 0.01 million KRW
= US$ (0.01/1008) million
= (0.01 x 30.8)/1008 million TWD
Output from Taiwan
= (0.01 x 30.8 x 1.02)/1008 million TWD
= (0.01 x1.02)/1008= US$ (0.0102/1008) million
Similarly output from Venezuela
= US$ (0.0103/1008) million
Output from Russia = US$ (0.0104/1008) million and Turkey = US$ (0.0105/1008) million.
Total output = US$ (0.0515/1008)
Here the total output is less than the total of Loan and Interest, so this transaction will yield a loss. 
So transaction II gives maximum profit.
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Besides giving the explanation of DIRECTIONS for the question:Study the following Graph & table given below and answer the question that follows.The following table shows the exchange rates and interest rates of currency of various countries.CAFECAFE Ltd., takes a loan of 0.1 million BRL (Brazilian Real) on 2nd March 2003 for one year from Brazil. It then purchases the coffee seeds from the local market at the rate of 4 BRL per kg of all the borrowed amount, spends US$ 1000 on transportation and refines the seeds in a plant in United States. It gets 0.8 kg of refined coffee for each kg of coffee seed. Refining costs US$ 3 per kg of coffee seed. The Company then sells the refined coffee in the market all over the world.Q.Which of the following transactions gives the maximum profit? (Use the currency rates and interest rates as on 2nd March 2004)1. 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Can you explain this answer? has been provided alongside types of DIRECTIONS for the question:Study the following Graph & table given below and answer the question that follows.The following table shows the exchange rates and interest rates of currency of various countries.CAFECAFE Ltd., takes a loan of 0.1 million BRL (Brazilian Real) on 2nd March 2003 for one year from Brazil. It then purchases the coffee seeds from the local market at the rate of 4 BRL per kg of all the borrowed amount, spends US$ 1000 on transportation and refines the seeds in a plant in United States. It gets 0.8 kg of refined coffee for each kg of coffee seed. Refining costs US$ 3 per kg of coffee seed. The Company then sells the refined coffee in the market all over the world.Q.Which of the following transactions gives the maximum profit? (Use the currency rates and interest rates as on 2nd March 2004)1. 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Can you explain this answer? theory, EduRev gives you an ample number of questions to practice DIRECTIONS for the question:Study the following Graph & table given below and answer the question that follows.The following table shows the exchange rates and interest rates of currency of various countries.CAFECAFE Ltd., takes a loan of 0.1 million BRL (Brazilian Real) on 2nd March 2003 for one year from Brazil. It then purchases the coffee seeds from the local market at the rate of 4 BRL per kg of all the borrowed amount, spends US$ 1000 on transportation and refines the seeds in a plant in United States. It gets 0.8 kg of refined coffee for each kg of coffee seed. Refining costs US$ 3 per kg of coffee seed. The Company then sells the refined coffee in the market all over the world.Q.Which of the following transactions gives the maximum profit? (Use the currency rates and interest rates as on 2nd March 2004)1. Take a loan of 0.05 million NIS(New Sheqel) from Israel then change half the amount to MXN(Mexican Peso)and invest it at the rate of 5% per annum for one year in Mexico and change the rest amount to HUF(Hungarian Forint) and invest it at the rate of 7% per annum for one year in Hungary.2. Take a loan of 0.05 million EGP(Egyptian Pound) from Egypt change in INR(Indian Rupees) and invest it at the rate of 19.9% per annum for one year in India.3. Take a loan of 0.05 million KRW(South Korean Won) and invest the amount in 5 equal parts in Indonesia, Taiwan, Venezuela, Russia and Turkey at the rate of 1%, 2%, 3%, 4% and 5% respectively.a)Transaction 1b)Transaction 2c)Transaction 3d)All three transactions have the same profit.Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice CAT tests.
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