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Sanford Turbines of Ogden, Utah designs and manufactures industrial gas turbines for onshore and offshore electrical power generation systems. All compressor components of the
Sanford Turbines of Ogden, Utah designs and manufactures industrial gas turbines for onshore and offshore electrical power generation systems. All compressor components of the turbine systems are purchased from manufacturers in mainland China. The compressor components make up 25% of the total turbine system costs. The company has recently completed a cost savings initiative on their mainline turbine system (Series 3000 model) which resulted in a 4% reduction to total system costs. As a result, the Series 3000 model cost were reduced from $1,350,000 to $1,296,000. The company is now worried that all of the compressor component costs that goes into a system (making up 25% of their total system costs) will be hit by a potential revaluation of the Chinese yuan -- if some in Washington get their way. How would a 15% revaluation of the yuan against the dollar impact total Series 3000 model turbine system costs? Show all your calculations supporting your analysis.
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