Question
e) Instead of selling to the Hungarian market only, suppose all sales were exports, priced in hard currency ($), yielding the same 4.5 billion forints
e) Instead of selling to the Hungarian market only, suppose all sales were exports, priced in hard currency ($), yielding the same 4.5 billion forints earnings (at the original 300 forints/$ exchange rate.) If the 25% devaluation now occurred, what would happen to the plants profit margins? (2 points)
4.5 billion + 45= 49.5 billion forints/ 300 forints per dollar = $ 165 m
4.5 billion+ 45 + 4.5 billion fortins / 375 forints per dollar = $ 132 M
In this scenario, the difference will be 32 millions, this will increase profits by 20 %
Explain me this answer? it is right????
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