Richland Crane (B). Richland Crane (U:S) exports heavy crane equipment to several Chinese dock faciltes. Soles are currently 10,000 units per year at the yuan equivalent of USD24,000 each. The Chinese yuan (CNY) has been trading at CNY8. 20 = USD1.00, but a Hong Kong advisory senice prediets the renminbi will doop in value next week to CNY9. 20= USD1.00, after which it wil remain unchanged for at least a decade. Accepting this forecast as given. Fochland Crane faces a pricing decision in the face of the impending devaluabon It may ether (1) maintan the same yuan price and in effect sel for fewer dollars, in which case Chinese volume will not change; or (2) maintain the same dollar price, nase the yian price in China to otrset the devaluabon, and experience a 10% drog in unit volume. Direet costi are 75% of the US. sales price. Addelonaly, financial manogement believes that if it maintains the same yuan salos price, volume will increase at 12% por annum through year eight. Doilar costs wir not change. At ite end of 8 years, Pochland potent expires and it wil no longor export to China. Atee the yuan is devalued to CNY9.20 = USD . 00, no further devaluabons are axpected. if Richland Crane naises the yuan price so as to maintain its dolar price, volume will incrouse at only 1 per annum through year eight, starting from the lower intad baso of 9,000 units. Agan dolar costs wal not change, and at the end of eight years Fichand Crane witi stop exporing to Ohina. Fichlands weighted average cost of coptat is 10% Oiven these considerations, what mould be Richland's pricing policy? Richland Crane (B). Richland Crane (U:S) exports heavy crane equipment to several Chinese dock faciltes. Soles are currently 10,000 units per year at the yuan equivalent of USD24,000 each. The Chinese yuan (CNY) has been trading at CNY8. 20 = USD1.00, but a Hong Kong advisory senice prediets the renminbi will doop in value next week to CNY9. 20= USD1.00, after which it wil remain unchanged for at least a decade. Accepting this forecast as given. Fochland Crane faces a pricing decision in the face of the impending devaluabon It may ether (1) maintan the same yuan price and in effect sel for fewer dollars, in which case Chinese volume will not change; or (2) maintain the same dollar price, nase the yian price in China to otrset the devaluabon, and experience a 10% drog in unit volume. Direet costi are 75% of the US. sales price. Addelonaly, financial manogement believes that if it maintains the same yuan salos price, volume will increase at 12% por annum through year eight. Doilar costs wir not change. At ite end of 8 years, Pochland potent expires and it wil no longor export to China. Atee the yuan is devalued to CNY9.20 = USD . 00, no further devaluabons are axpected. if Richland Crane naises the yuan price so as to maintain its dolar price, volume will incrouse at only 1 per annum through year eight, starting from the lower intad baso of 9,000 units. Agan dolar costs wal not change, and at the end of eight years Fichand Crane witi stop exporing to Ohina. Fichlands weighted average cost of coptat is 10% Oiven these considerations, what mould be Richland's pricing policy
