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Assume that relative Purchasing Power Parity holds. Also assume that the inflation rate over the coming year is expected to be 3% in the U.S.

Assume that relative Purchasing Power Parity holds. Also assume that the inflation rate over the coming year is expected to be 3% in the U.S. and 1% in Sweden and that the current spot rate of the Swedish krona (SEK) is $0.12. If your company plans to import 1 million SEK of product from Sweden over the coming year, how many U.S. dollars will it need to pay if it plans to convert USD to SEK one year from now?

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