Q 1(a) [10 Marks] Collins Limited (CL) is a manufacturer of quality shirts located in a modern premises In Limerick City. The Irish market and European market make up 35% of CL's annual revenue and the remainder 65% of sales come from boutique high street shops in the UK. The UK sales are always quoted in sterling and the annual sterling revenues are 5,500,000. The director/owner of the business, Michelle Collins is concerned about the effects that Brexit may have on the business and the likely exchange rate for the dollar and sterling in twelve months' time. She has approached you as a financial manager and has asked for advice. The business imports most of its cotton material from a supplier in Kansas, USA. The material has been of the highest quality in the past and the director of Collins Limited has always been satisfied with the quality and efficiency of the supply. Purchases from this supplier are usually $750,000 per annum and are always quoted in dollars. There are no other expected changes other than exchange rates and the following financial data is available: Current Spot Rate 1.10 1 Current Spot Rate E/S $1.68 1 And Expected annual inflation rate per jurisdiction USA 2% Eurozone 4% And Current borrowing annual Interest rate per jurisdiction Eurozone 5% UK 3% Requirement: Write a report to the director of Collins Limited briefly explaining the meaning of Purchase Power Parity Theorem (PPPT) and Interest Rate Parity Theorem (IRPT), then predict using PPPT the future currency exchange rates in twelve months' time for the dollar and using IRPT predict the future exchange rate for sterling in twelve months' time, as outlined above