Tên: Ph Kh Minh
MSSV: 31181023818 CHAPTER 12
Exercise 1
a) Spot rate on the date of an invoice is between (Ps/$)3.50 and Ps/$4.50
If exchange rate (Ps/$)6.00; Less Exchange rate allowable (Ps/$)4.50 = 6.00 – 4.50 =
(Ps/$)1.50
The dollar cost of six months of imports to DeMagistris will be: 𝑃𝑠8,000,000
4.50+(1.50
2) =$1,523,809.52
However, the lower cost of importing might lead to higher DeMagistris’ sales and therefore a
higher import total than Ps8,000,000.
b) The export sales of Acuña would remain at Ps 8 million, unless the lower dollar cost
encourages DeMagistris to import more from Acuña.
Exercise 3
Assumptions
Sales volume per year (unit)
10,000
Sales price per unit
$24,000
Direct costs as % of US$ sales price
75%
Direct costs per unit
$24,000*75% = $18,000
Spot exchange rate, yuan/$
8.20
Expected spot rate, yuan/$
9.00
Unit volume decrease if price increased
10%
Pricing strategy:
Case 1: Maintain the same yuan price and in effect sell for fewer dollars, sales volume
unchange
Expected price in dollar = Currently price in dollar * Spot exchange rate (yuan/$)
Expected spot rate (yuan/$)
= $24,000*(8.2/9.0) = $21,866.7
US dollar price per unit
$21,866.667
Sales volume (unit)
10,000
Sales revenue
$21,866.667*10,000 = $218,666,667
Direct costs
-($18,000*10,000) = -$180,000,000
Profit
$218,666,667 – $180,000,000 = $38,666,667
US dollar price per unit
$24,000
Sales volume (unit)
10,000*(1 – 10%) = 9,000
Sales revenue
$24,000*9,000 = $216,000,000
Direct costs
-($18,000*9,000) = –$162,000,000
Profit
$216,000,000 – $162,000,000 = $54,000,000