Question
Dell is selling 30,000 units in Europe at an average price of 1,500 per unit. Both the spot and forward exchange rates are $1.20/. The
Dell is selling 30,000 units in Europe at an average price of 1,500 per unit. Both the spot and forward exchange rates are $1.20/. The cost of each unit in dollars is $1,300 per unit. The elasticity of demand for Dell computers in Europe is = 1.5.Now consider a depreciation of Euro (relative to US Dollar) from $1.20/ euro to $1.08/euro.
What is the delta for dell's dollar profit when passthrough =0.8?
A) 1.98
B)2.09
C)2.58
D)5.74
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Valuation Measuring and managing the values of companies
Authors: Mckinsey, Tim Koller, Marc Goedhart, David Wessel
5th edition
978-0470424650, 9780470889930, 470424656, 470889934, 978-047042470
