Question

Cnooc, a Chinese public-sector company, has made a bid to purchase Canada’s Nexen, a big oil company, for C$ 15.1 billion in June 2012. Treat this as an initial investment made by Cnooc in this two-year, Canadian project. If it has purchased Nexen in September 2012, how many Yuan does Cnooc save on its initial investment because of the change in the CNY to CAD exchange rate from 6.3698 Yuan/C$ in June 2012 to 6.3465 Yuan/C$ in September, 2012?

Answer 1

351,830,000 Yuan

Step-by-step explanation:

Investment value = C$ 15.1 billion

Value in Yuan in June 2012 = C$ 15.1 billion x 6.3698 Yuan/C$

Value in Yuan in September 2012 = C$ 15.1 billion x 6.3465 Yuan/C$

The difference in Yuan if Cnooc has purchased Nexen in September instead of June is:

`D= 15,100,000,000*(6.3698 - 6.3465)\\D= 351,830,000 \ Yuan`

Cnocc saves 351,830,000 Yuan