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In 2010 an Australian company bought products from the USA - HSC - SSCE Business Studies - Question 15 - 2010 - Paper 1
Question 15
In 2010 an Australian company bought products from the USA. If the Australian dollar rises in value against the US dollar before the payment is made, which of the f... show full transcript
Worked Solution & Example Answer:In 2010 an Australian company bought products from the USA - HSC - SSCE Business Studies - Question 15 - 2010 - Paper 1
Step 1
The company will have more funds available for other uses.
Answer
When the Australian dollar strengthens against the US dollar, the amount of Australian dollars required to purchase the same amount of US products decreases. This means that when the payment is made, the company will need to spend fewer Australian dollars than initially anticipated, leading to surplus funds. Consequently, the company can then allocate these additional funds to other uses, making option (D) the correct choice.