Question
Fujitsu produces a chip set and exports them to the United States. Last year the exchange rate was 111.30/$ and Fujitsu charged 5,565 per chip
Fujitsu produces a chip set and exports them to the United States. Last year the exchange rate was 111.30/$ and Fujitsu charged 5,565 per chip set in Japan and $50 per chip set in the United States. Currently the spot exchange rate is 108.51/$ and Fujitsu is charging $51 per chip set in the United States. What percent of the implied new price was passed on in the new U.S. chip set price? (Round percentage answer to two decimal places and answer X.XX% as X.XX, without the percentage sign)
The treasurer of a German company operating in Australia considers a 180-day bank loan of 400,000 with an interest rate of 4.00% (euro based). The current spot rate is 1.5600A$/ and a local loan in Australian dollars (A$) would carry a rate of 4.2%. Expected inflation rates are 2.0% and 3.0% in Australia and in Europe, respectively, for the coming year. According to purchasing power parity, what is the effective cost of A$ funds for the German company? (Round percentage answer to two decimal places and answer X.XX% as X.XX, without the percentage sign)
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