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, 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.

Date		1Q 2007		2Q 2007		3Q 2007		4Q 2007		1Q 2008		2Q 2008		3Q 2008		4Q 2008		1Q 2009		2Q 2009		3Q 2009		4Q 2009
Price (millions of pounds, )		22.50		22.50		22.50		22.50		22.50		22.50		22.50		22.50		22.50		22.50		22.50		22.50
Spot rate (euro = 1.00 pound)		1.4918		1.4733		1.4696		1		1.3198		1.2617		1.2590		1		1.1017		1.1375		1.1467		1

1) Compute the Euro value price in Q4 of 2007.

2) What is the price change in Euro for the engine over the time period considered?

3)

Now consider the following information regarding sales of the engine over the same period.

		1Q 2007		4Q 2008		4Q 2009
Price (in millions of )		22.50		22.50		22.50
Spot rate (/)		1.4918		1.204		1.113
Sales volume (engines)		200		220		240

What was the percentage change in total expenditure by Airbus for engine purchases from Rolls-Royce over the period?