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11.1 Aidan Turkey (A). Using the facts outlined for Aidan Turkey, assume the exchange rate on January 2, 2016, in Exhibit 11.4 dropped in value

11.1 Aidan Turkey (A). Using the facts outlined for Aidan Turkey, assume the exchange rate on January 2, 2016, in Exhibit 11.4 dropped in value from t5.2000/ to 5.5000/ (rather than to 16.0000/). Recalculate Aidan Turkey's translated balance sheet for January 2,2016, with the new exchange rate using the current rate method. a. What is the amount of translation gain or loss? b. Where should the translation gain or loss appear in the financial statements? 11.2 Aidan Turkey (B). Using the facts outlined for Aidan Turkey, assume as in Problem 11.1 that the exchange rate on January 2, 2016, in Exhibit 11.4 dropped from 15.2000/ to 5.5000/ (rather than to 16.0000/). Recalculate Aidan Turkey's translated balance sheet for January 2, 2016, with the new exchange rate using the temporal rate method. a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? c. Why does the translation loss or gain under the temporal method differ from the loss or gain under the current rate method? 12.3 Manitowoc Crane (A). Manitowoc Crane (U.S.) exports heavy crane equipment to several Chinese dock facilities. Sales are currently 10,000 units per year at the yuan equivalent of $24,000 each. The Chi- nese yuan (renminbi) has been trading at Yuan8.20/5. but a Hong Kong advisory service predicts the ren- minbi will drop in value next week to Yuan9.00/$. after which it will remain unchanged for at least a decade. Accepting this forecast as a given, Manitowoc Crane must make a pricing decision in the face of the impending devaluation. It may either (1) maintain the same yuan price and in effect sell for fewer dollars, in which case Chinese volume will not change; or (2) maintain the same dollar price, raise the yuan price in China to offset the devaluation, and experience a 10% drop in unit volume. Direct costs are 75% of the U.S. sales price. a. What would be the short-run (one-year) impact of each pricing strategy? b. Which do you recommend? 12.4 Manitowoc Crane (B). Assume the same facts as in Problem 12.3. Additionally, financial management believes that if it maintains the same yuan sales price, volume will increase at 12% per annum for eight years. Dollar costs will not change. At the end of 10 years, Manitowoc's patent expires and it will no longer export to China. After the yuan is devalued to Yuan9.20/S, no further devaluations are expected. If Manitowoc Crane raises the yuan price so as to maintain its dollar price, volume will increase at only 1% per annum for eight years, starting from the lower initial base of 9,000 units. Again, dollar costs will not change, and at the end of eight years, Mani- towoc Crane will stop exporting to China. Manito- woc's weighted average cost of capital is 10%. Given these considerations, what should be Manitowoc's pricing policy

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