Case-in-brief - Chapter 6 - Argentina Currency Devaluation Your company is currently operating in Argentina. Management is concerned to what extent the Argentine peso will be devalued. It wants to examine two scenarios: one where the currency drops 15% and one where it drops 25%. Currently, the exchange rate is 92 pesos (ARS$ 92) to 1 US dollar (US$1). Contribution after marketing in Argentina was 21% of sales (see Exhibit). Your goal is to maintain this percentage. Exhibit: Argentina Contribution after Marketing (ARS$ Argentine Pesos) Unit Sales Manufacturer Sales Costs Gross Margin Total Marketing Units ARS % 46 325.9 100% 183.3 56% 142.6 44% 73.3 22% Contribution after Marketing 69.3 21% QUESTION 2 How much more sales revenue would be needed in Argentina to maintain your current contribution after marketing? Additional Manufacturer Sales in Argentine Pesos after 15% drop: 0.000 Additional Manufacturer Sales in Argentine Pesos after 25% drop: 0.000

Case-in-brief - Chapter 6 - Argentina Currency Devaluation Your company is currently operating in Argentina. Management is concerned to what extent the Argentine peso will be devalued. It wants to examine two scenarios: one where the currency drops 15% and one where it drops 25%. Currently, the exchange rate is 92 pesos (ARS$ 92) to 1 US dollar (US$1). Contribution after marketing in Argentina was 21% of sales (see Exhibit). Your goal is to maintain this percentage. Exhibit: Argentina Contribution after Marketing (ARS$ Argentine Pesos) Unit Sales Manufacturer Sales Costs Gross Margin Total Marketing Units ARS % 46 325.9 100% 183.3 56% 142.6 44% 73.3 22% Contribution after Marketing 69.3 21% QUESTION 2 How much more sales revenue would be needed in Argentina to maintain your current contribution after marketing? Additional Manufacturer Sales in Argentine Pesos after 15% drop: 0.000 Additional Manufacturer Sales in Argentine Pesos after 25% drop: 0.000

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter17: Multinational Capital Structure And Cost Of Capital

Section: Chapter Questions

Problem 24QA

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