Acuna Leather Goods:

DeMagistris based in New York, imports leather coats from Acuna Leather goods, a reliable and longtime supplier, based in Buenos Aires, Argentina. Payment is in Argentine pesos. When the pesos lost its parity with the dollar in January 2002, it collapsed in value to Ps4.0/$ by October 2002.As long as the spot rate on the date of invoice is between Ps3.5/$ and Ps4.5/$, DeMagistris will pay based on the spot rate.The risk sharing agreement will last for 6 months, at which time the exchange rate limits will be reevaluated.DeMagistris contracts to import leather coats from Acuna for Ps8,000,000 or $2,000,000 at the current spot rate of Ps4.0/$ during the next 6 months.

A.If the exchange rate changes immediately to Ps6.00/$, what will be the dollar cost of 6 months of imports to DeMagistris?

B.At Ps6.00/$, what will be the peso export sales of Acuna Leather Goods to DeMagistris?