Harmony is a South African mining company that exports 21 ounces of gold to the US. Gold is priced in US dollars but Harmony's workers are paid in rand (the currency of South Africa). The current price of gold is 1.614 dollars per ounce. The current exchange rate is 17 rand (R) per $1. Harmony's current mining costs are R14,000 per ounce. Expected one-year inflation rates are 3 in the U.S. and 5 in South Africa (in %). If the exchange rate in one year is consistent with PPP, what is the gold price that would maintain Harmony's profits constant in real terms? Enter your answer with no decimals (so enter 9.8 as 10) 575,904 1,662 margin of error +/-1

Harmony is a South African mining company that exports 21 ounces of gold to the US. Gold is priced in US dollars but Harmony's workers are paid in rand (the currency of South Africa). The current price of gold is 1.614 dollars per ounce. The current exchange rate is 17 rand (R) per $1. Harmony's current mining costs are R14,000 per ounce. Expected one-year inflation rates are 3 in the U.S. and 5 in South Africa (in %). If the exchange rate in one year is consistent with PPP, what is the gold price that would maintain Harmony's profits constant in real terms? Enter your answer with no decimals (so enter 9.8 as 10) 575,904 1,662 margin of error +/-1

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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