Question
6. Suppose that you want to import a car from overseas. You have identified four comparable cars; Chevrolet car for US$ 46,000, Volkswagen for 31,800,
6. Suppose that you want to import a car from overseas. You have identified four comparable cars; Chevrolet car for US$ 46,000, Volkswagen for 31,800, a Honda for 4.4 million and a Hyundai for 44 million Korean won. The following table presents the current and forward exchange rates of Dirham per one unit of foreign currencies.
Foreign currencies
| Current exchange rate | Future rates (3-months forward) |
US dollar | 3.6723 | 3.6816 |
Euro | 3.9341 | 4.0530 |
Japanese Yen | 0.0280 | 0.0261 |
Korean Won | 0.0029 | 0.0032 |
(a) Identify which car is the cheapest car. (b) Identify the currencies that have appreciated (c) Identify the currency that has depreciated (d) Discuss whether you will buy the car today or after 3 months.
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