problem: Rolls-Royce, the British jet engine producer, sells engines to United State airlines & buys parts from United State companies. Assume it has accounts receivable of $1.5 billion and accounts payable of $740 million. It also borrowed $600 million. The current spot rate is $1.5128/£.
[A] find out Rolls-Royce's dollar transaction exposure in dollar terms? [In pound terms]
[B] Assume the pound appreciates to $1.7642/£. find out Rolls-Royce's gain or loss, in pound terms, on its dollar transaction exposure?