Can post again if you need this asked in more than 1 question!

12.8 Rolls-Royce Turbine Engines Rolls-Royce is struggling with its pricing strategy with a number of its major customers in Continental Europe, particularly Airbus. Since Rolls-Royce is a British company with most manufacturing of the Airbus engines in the United Kingdom, costs are predominantly denominated in British Pounds. But in the period shown, 2007-2009, the pound steadily weakened against the euro. Rolls-Royce has traditionally denominated its sales contracts with Airbus in Airbus' home currency, the euro. Instructions: 1) Reconstitute the table for Problem 12.8 shown on page 346 in a well designed Excel spreadsheet and name it: Last_First_Problem 12.8_Rolls-Royce engines. 2) Complete the table and in Part (b) of the table and summarize in one short sentence what happened over the period IQ 2007 to 1Q 2009 for these 6 parameters: Price (in millions of ) Spot rate (/) Price (in millions of ) Sales volume (engines) Total cost to Airbus (millions of ) Total revenue to RR (millions of ) 3) Answer these 4 questions: a) Assuming each Rolls-Royce engine marketed to Airbus costs 22.5 million each, how has the price of that engine changed over the period shown when priced in euros at the current spot rate? (fill out the table) b) What is the cumulative percentage change in the price of the engine in euros for the three year period? (one decimal place) c) If the price elasticity of demand for RR turbine sales to Airbus is relatively inelastic, and the price of the engine in British pounds never changes over the period, what does this price change mean for Rolls-Royce's total sales revenue on sales to Airbus of this engine? (answer in your spreadsheet) d) Compare the prices and volumes for the first quarter of each of the three years shown. Who has benefited the most from the exchange rate changes? Problem 12.8 10 2008 22.50 40 2007 50 14107 20 2007 22 50 1.4733 30 2007 22.50 1.4696 20 2008 22.50 1.2617 10 2007 22.50 1.4918 33.57 1.3198 Price (millions of pounds. E) Spot rate (euro = 1.00 pound) Price (millions of euros) 30 2009 40 2009 22.50 4Q 2008 22,50 1.1924 20 2009 22.50 1.1375 22.50 1.1467 22.50 1.1066 30 2008 22.50 12590 Date Price (millions of pounds. ) Spot rate (euro = 1.00 pound) Price (millions of cury, ) 11017 Chg (b) 10 2007 22.50 1.4918 33.57 200 6,713.10 4,500,00 Price (in millions of ) Spot rate (EE) Price (in millions of ) Sales volume (engines) Total cost to Airbus (millions of E) Total revenue to RR (millions of ) 1Q 2008 22.50 1.3198 29.70 220 6,533.01 4.950.00 10 2009 22.50 1.1017 24.79 240 5.949.18 5,400.00 20.0% 1Q 2008 Problem 12.8 4Q 2007 22.50 1.4107 22.50 1.3198 20 2008 22.50 1.2617 3Q 2007 22.50 1.4696 (a) Date 20 2007 22.50 1.4733 1Q 2007 22.50 1.4918 33.57 Price (millions of pounds, ) Spot rate (euro = 1.00 pound) Price (millions of euros, ) 20 2009 3Q 2009 4Q 2008 22.50 3Q 2008 40 20 22.50 .1066 1Q 2009 22.50 22.50 1.1375 Date 1.1467 1 22.50 22.50 1.1924 1.1017 1.2590 Price (millions of pounds, ) Spot rate (euro = 1.00 pound) Price (millions of euros, ) % Chg (b) 1Q 2007 22.50 1.4918 33.57 200 6,713.10 4,500.00 Price (in millions of ) Spot rate (/) Price (in millions of ) Sales volume (engines) Total cost to Airbus (millions of ) Total revenue to RR (millions of ) 1Q 2008 22.50 1.3198 29.70 220 6,533.01 4,950.00 10 2009 22.50 1.1017 24.79 240 5,949.18 5,400.00 20.0% 12.8 Rolls-Royce Turbine Engines Rolls-Royce is struggling with its pricing strategy with a number of its major customers in Continental Europe, particularly Airbus. Since Rolls-Royce is a British company with most manufacturing of the Airbus engines in the United Kingdom, costs are predominantly denominated in British Pounds. But in the period shown, 2007-2009, the pound steadily weakened against the euro. Rolls-Royce has traditionally denominated its sales contracts with Airbus in Airbus' home currency, the euro. Instructions: 1) Reconstitute the table for Problem 12.8 shown on page 346 in a well designed Excel spreadsheet and name it: Last_First_Problem 12.8_Rolls-Royce engines. 2) Complete the table and in Part (b) of the table and summarize in one short sentence what happened over the period IQ 2007 to 1Q 2009 for these 6 parameters: Price (in millions of ) Spot rate (/) Price (in millions of ) Sales volume (engines) Total cost to Airbus (millions of ) Total revenue to RR (millions of ) 3) Answer these 4 questions: a) Assuming each Rolls-Royce engine marketed to Airbus costs 22.5 million each, how has the price of that engine changed over the period shown when priced in euros at the current spot rate? (fill out the table) b) What is the cumulative percentage change in the price of the engine in euros for the three year period? (one decimal place) c) If the price elasticity of demand for RR turbine sales to Airbus is relatively inelastic, and the price of the engine in British pounds never changes over the period, what does this price change mean for Rolls-Royce's total sales revenue on sales to Airbus of this engine? (answer in your spreadsheet) d) Compare the prices and volumes for the first quarter of each of the three years shown. Who has benefited the most from the exchange rate changes? Problem 12.8 10 2008 22.50 40 2007 50 14107 20 2007 22 50 1.4733 30 2007 22.50 1.4696 20 2008 22.50 1.2617 10 2007 22.50 1.4918 33.57 1.3198 Price (millions of pounds. E) Spot rate (euro = 1.00 pound) Price (millions of euros) 30 2009 40 2009 22.50 4Q 2008 22,50 1.1924 20 2009 22.50 1.1375 22.50 1.1467 22.50 1.1066 30 2008 22.50 12590 Date Price (millions of pounds. ) Spot rate (euro = 1.00 pound) Price (millions of cury, ) 11017 Chg (b) 10 2007 22.50 1.4918 33.57 200 6,713.10 4,500,00 Price (in millions of ) Spot rate (EE) Price (in millions of ) Sales volume (engines) Total cost to Airbus (millions of E) Total revenue to RR (millions of ) 1Q 2008 22.50 1.3198 29.70 220 6,533.01 4.950.00 10 2009 22.50 1.1017 24.79 240 5.949.18 5,400.00 20.0% 1Q 2008 Problem 12.8 4Q 2007 22.50 1.4107 22.50 1.3198 20 2008 22.50 1.2617 3Q 2007 22.50 1.4696 (a) Date 20 2007 22.50 1.4733 1Q 2007 22.50 1.4918 33.57 Price (millions of pounds, ) Spot rate (euro = 1.00 pound) Price (millions of euros, ) 20 2009 3Q 2009 4Q 2008 22.50 3Q 2008 40 20 22.50 .1066 1Q 2009 22.50 22.50 1.1375 Date 1.1467 1 22.50 22.50 1.1924 1.1017 1.2590 Price (millions of pounds, ) Spot rate (euro = 1.00 pound) Price (millions of euros, ) % Chg (b) 1Q 2007 22.50 1.4918 33.57 200 6,713.10 4,500.00 Price (in millions of ) Spot rate (/) Price (in millions of ) Sales volume (engines) Total cost to Airbus (millions of ) Total revenue to RR (millions of ) 1Q 2008 22.50 1.3198 29.70 220 6,533.01 4,950.00 10 2009 22.50 1.1017 24.79 240 5,949.18 5,400.00 20.0%