per year at $200 each. A rumor exists that the exchange rate will be R2/$ in two weeks and then remain fixed. Accepting this forecast, HPP faces the following choices
a.Maintain the same price in Real so their sales are not hurt.
b.Maintain the same price in U.S. Dollars and experience a 20% sales loss. Costs are $120 each.
Answer:
The correct answer to your question is OK. However, you probably want to know which would be more profitable, which is to maintain the price at $200 US or R400.
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