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Fundamentals of Financial Manageme...

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

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977
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?

a)

Summary Introduction

To identify: Whether the price in dollars of automobile decrease or increase during the 34-year period due to the changes in the exchange rate.

Introduction:

Exchange rate is at which one currency of a country is exchanged with the currency of another country is termed as exchange rate.

Explanation

The reasons on whether the prices in dollars of automobile decrease or increase during the 34-year period due to the changes in the exchange rate are as follows:

  • The exchange rate of one dollar in terms of yen was 245 yen in 1983 and 102 yen in 2014...

b)

Summary Introduction

To determine: The price of the automobile in the year 2014 in terms of Country U dollar.

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