Question
Dell is selling 20,000 units in Europe at an average price of 1,700 per unit. Both the spot and forward exchange rates are $1.20/. The
Dell is selling 20,000 units in Europe at an average price of 1,700 per unit. Both the spot and forward exchange rates are $1.20/. The cost of each unit in dollars is $1,500 per unit. The elasticity of demand for Dell computers in Europe is = 1.5.
Reconsider a depreciation of Euro ( relative to US dollar) from $1.20/ to $1.08/. Now assume passthrough = 0.5. What is Dell's total profit in $?
What are respectively the delta and exposure for Dell's dollar profit passthrough =0.5?
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Forecasting Methods And Applications
Authors: Spyros G. Makridakis, Steven C. Wheelwright, Rob J Hyndman
3rd Edition
0471532339, 9780471532330
