Pacific Leather Goods Ltd. an Indian manufacturer exports leather goods to USA. The company is exporting 5000 units at a price of $60. The company has imported some specialty chemicals from Europe to produce the export items. The cost of chemicals per unit of leather good stands at Euro 10. The fixed overhead costs per unit comes at Rs.250 and other variable overheads, including the freight cost, add upto Rs.1250 per unit. The payments for both exports and imports are due in six months. The current exchange rate are as follows: Rs./$ 46.90 Rs./Euro After six months (at the time of settlement of payments) the exchange rate turns out as follows: 40.40 47.90 Rs./$ Rs./Euro You are required to: 41.25 i. Calculate the loss/gain due to transaction exposure. ii. Based on the following additional information calculate the losses/gains due to transaction and operating exposure if the contracted export price per unit is Rs.2700: The current exchange rate changes to Rs./$ : 47.50 Rs./Euro : 40.80 Price elasticity of demand for the company's product in the USA is estimated to be 1.60. 24/34 The payments are to be settled at the end of sixth month