7. Trident Europe: Case 5. Trident Europe (see Exhibit 10.3) finds that domestic costs increase in proportion to the drop in value of the euro because of local inflation and a rise in the cost of imported raw materials and components. This rise in costs (+20%) applies to all cash costs, including direct costs and fixed cash operating costs. However, it does not apply to depreciation. Because of the increase in its costs Trident Europe increases its sales price in curos from 12.80 per unit to 15.36 per unit.

a. What is the impact on cash flow?

b. What is the impact on working capital needed?

c. What is the impact on the present value approach to measuring operating exposure?