Our Guy ) Rolls-Royce Turbine Engines. Rolls-Royce is struggling with its pricing strategy with a number of its major customers in Continental Europe, particularly Airbus. Since Rolls-Royce is a British company with most manufacturing of the Airbus engines in the United Kingdom, costs are predominantly denominated in British pounds. But in the period shown in the popup window, 2007-2009, the pound steadily weakened against the euro. Rolls-Royce has traditionally denominated its sales contracts with Airbus in Airbus' home currency, the euro. After completing the table answer pe following questions: a. Assuming each Rolls-Royce engine marketed to Airbus is initially priced at 22.42 million each, how has the price of that engine changed over the period shown when priced in euros at the current spot rate? b. Complete the table in the popup window. What is the cumulative percentage change in the price of the engine in euros for the two-year period? c. If the price elasticity of demand for Rolls-Royce turbine sales to Airbus is relatively inelastic, and the price of the engine in British pounds never changes over the period, what does this price change mean for Rolls-Royce's total sales revenue on sales to Airbus of this engine? d. Compare the prices and volumes for the first quarter of each of the three years shown in the table in part b above. Who has benefitted the most from the exchange rate changes? a. Compute the sales prices per unit of engine in euros for the three-year period in the following table (Round to two decimal places.) Date Price (millions of pounds, E) Spot rate (euro 1.00 pound) Price (milions of euros, E) 19 2007 20 2007 30 2007 49 2007 22.42 22.42 2242 2242 1.4936 14732 14672 14114 33,49 LELED 10 2008 2242 1.3165 20 2008 2242 12636 Date Price (millions of pounds, ) Spot rate (euro = 1.00 pound) Price (milions of euros, ) 3Q 2008 22.42 1.2572 4Q 2008 2242 1.1947 10 2009 2242 1.1046 20 2009 2242 5.1363 7 30 2009 2242 11482 4Q 2009 2242 1.1097 Enter any number in the edit fields and then click Check Answer. Check Answer Clear All 5 Parts remaining al ERITYUTO HUWI I Ho popup Window, 2007-2009, th Auestions: i Data Table d in euros s traditional ngine mark up window for Rolls- on sales mes for the at does th Inges? unit of engi Date Price (millions of pounds, ) Spot rate (euro = 1.00 pound) Price (millions of euros, ) 3Q 2007 22.42 1.4672 1Q 2007 22.42 1.4936 33.49 2Q 2007 22.42 1.4732 _ 4Q 2007 22.42 .4114 - 1 10 2008 22.43 1.3165 - 20 2008 22.42 1.2636 1Q 2 E E 31 3Q 2008 22.42 1.2572 4Q 2008 22.42 1.1947 Date Price (millions of pounds, ) Spot rate (euro = 1.00 pound) Price (millions of euros, ) 10 2009 2242 1.1046 20 2009 22.42 1.1363 3Q 2009 4Q 2009 22.42 22.42 1.14821 .1097 1947 30 2 1. d) Print Done elds and then click Check Answer. Clear All nominated its sales contracts with Airbus in Airbus' home currency, the euro. After completing the table answer the following questions HOA nen priced in euro i Data Table WH etul bus uar period, what does prate changes? Date 1Q 2007 eur Price (in millions of pounds, ) Spot rate (/L) Price (in millions of euros, ) Sales volume (engines) Total cost to Airbus (millions of ) Total revenue to RR (millions of ) 22.42 1.4936 33.49 200 6,698 4,484 1Q 2008 22.42 1.3165 29.52 220 6,494 4,932 1Q 2009 %Chg 22.42 - 1.1046 24.77 240 20.00% 5,945 - 5,381 Print Done TET Flick Check Answer. Clear All