Assessing Exposure to Net Cash Flows Reese Co. will pay 1 million British pounds for materials imported from the U.K. in 1 month. Reese Co. sells some goods to Poland and will receive 3 million zloty

(the Polish currency) for those goods in 1 month. The spot rate of the pound is $1.50, while the spot rate of the zloty is about $.30. Assume that the pound and zloty are both expected to depreciate substantially against the dollar over the next month and by the same degree (percentage). Will this have a favorable effect, unfavorable effect, or no effect on Reese Co.

over the next year? Explain.