A firm can produce orange juice in the US and ship it to Japan at a cost of $1.75/unit. They want to sell it with a 50% markup (50% higher than their cost), and the yen/US$ exchange rate is 111.11.

1) At what price would they sell it in Japan (in yen)?

2)What is their US$ profit?

Now suppose the $ appreciates from /US$ 111.11 to 120/US$ prior to payment.

3) What is the new US$ revenue and profit?

4) How does it compare with what the company was expecting?

5) What might the company have done to protect itself?