1. A US based firm exports its product to Mexico where it sells the product at a competitive price of 9,992.25 Pesos. The firm earns zero profit on this sale. If the current exchange rate is $1 US buys 22.5 pesos, then what is the cost of production for this firm in the US? A) $438.0 B) $444.1 C) $460.5 D) $468.8 2. A US investor has $9,900 to invest for one year, either in the US, or in a Australian pension fund located in Perth, that pays 4.1% interest. Currently, $1 US buys 1.75 Australian dollars, and the investor believes the future rate will be Et+1 = 1.69. The investor claims to be exactly indifferent between the two options, implying that the US interest rate must be: A) 5.9% B) 7.8% C) 8.9% D) 10.4