nt China. Sales acrenty 20,000 units peryear at the Yuan equivalent of $50,000 each. The Yuan has been trading at Yuan 10.00/ but Citibank predicts it will drop next week to Yuan 11.50/S. Caterpillar faces a Caterpillar Inc. exports heavy farm equipment China. Sa pncing decision ue to the operating exposure: Keep the same Yuan price e sei or e er do ars, unit volume will not change 8. Keep the same dollar p ce, h s increasing the Yuan p e n China, but experience un vou me drops 9%, Direct stsare S the us. sa es p ce Deloitte Cons advises that AT keeps Yuan sales price the same, voi e will increase at 15% per annum or 3 years. Olla costs will not change. At the endo 3 years, AT i no gere port to h na twill man ac ure there butt at ls a d erent decision CAT increases the Yuan p ce to etain dolar p ce volume w increase at on 3% per annum or 3 years, starting from the lower in al base. A an do arcosts not cha ea at ne en of 3 years C T stope porting to a WACC is 12%. Time Data Table Volume at time O (-today) Price at time 0 Current Spot Rate Yuan/$ Forecasted Spot Rate Yuan/$ Annual Volume Increase if Yuan Price maintained Drop in volume in year 1 i prico is incroased Annual Volume Increase Yuan Price is raised Direct cost-COGS as % of current USD Price