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RESULTS OF EXCHANGE RATE CHANGES Early in June 1983, it took 245 Japanese yen to equal $1. In June 2014, that exchange rate had fallen to 102 yen to $1. Assume that the price of a Japanese-manufactured automobile was $9,000 in June 1983 and that its price changes were in direct relation to exchange rates. a. Has the price, in dollars, of the automobile increased or decreased during the 31-year period because of changes in the exchange rate? b. What would the dollar price of the automobile be in June 2014, again assuming that the car’s price changes only with exchange rates?

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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977
BuyFind

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977

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Chapter
Section
Chapter 19, Problem 15P
Textbook Problem

RESULTS OF EXCHANGE RATE CHANGES Early in June 1983, it took 245 Japanese yen to equal $1. In June 2014, that exchange rate had fallen to 102 yen to $1. Assume that the price of a Japanese-manufactured automobile was $9,000 in June 1983 and that its price changes were in direct relation to exchange rates.

  1. a. Has the price, in dollars, of the automobile increased or decreased during the 31-year period because of changes in the exchange rate?
  2. b. What would the dollar price of the automobile be in June 2014, again assuming that the car’s price changes only with exchange rates?

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