5. Measuring Economic Exposure (9 points) Using the following cost and revenue information shown for Melbourne Corp., a US-based company, determine how the costs, revenue, and earnings items would be affected by three possible exchange rate scenarios for the Australian dollar against the U.S. dollar ("AUDUSD"); (I) 0.70 and (2) 0.80. (Assume U.S. sales will be unaffected by the exchange rate.) Assume that AUD earnings will be remitted to the U.S. parent company at the end of the period. Revenue and Cost Estimates: Melbourne Corp. (in millions of USD and AUD) Sales Cost of Goods Sold Gross Profit Operating Expenses U.S. Business USD 800 500 USD 300 200 AU Business AUD 700 100 AUD 600 0 Earnings Before Interest and Taxes (EBIT) Interest Expense EBT USD 100 200 -USD 100 AUD 600 0 AUD 600 Questions: a. Create a USD-based income statement to analyze the economic exposure. (6 points) b. From its parent company's (located in the U.S.) perspective, does Melbourne Corp, behave like an exporter or an importer? (1 point) Why? (2 points) 5. Measuring Economic Exposure (9 points) Using the following cost and revenue information shown for Melbourne Corp., a US-based company, determine how the costs, revenue, and earnings items would be affected by three possible exchange rate scenarios for the Australian dollar against the U.S. dollar ("AUDUSD"); (I) 0.70 and (2) 0.80. (Assume U.S. sales will be unaffected by the exchange rate.) Assume that AUD earnings will be remitted to the U.S. parent company at the end of the period. Revenue and Cost Estimates: Melbourne Corp. (in millions of USD and AUD) Sales Cost of Goods Sold Gross Profit Operating Expenses U.S. Business USD 800 500 USD 300 200 AU Business AUD 700 100 AUD 600 0 Earnings Before Interest and Taxes (EBIT) Interest Expense EBT USD 100 200 -USD 100 AUD 600 0 AUD 600 Questions: a. Create a USD-based income statement to analyze the economic exposure. (6 points) b. From its parent company's (located in the U.S.) perspective, does Melbourne Corp, behave like an exporter or an importer? (1 point) Why? (2 points)