The quesiton is based on International Financial Management. Main input is priced in $AUD (A$50 / unit) All other costs are in USD$ (Fixed cost = U$ 2 million, Variable cost = U$ 30/unit) Depreciation = U$ 0.5 mil S0 = A$ 1.25 / U$ Expects to sell 50,000 clothes this year at U$ 150 each Tax rate = 30%; assume tax credits are available for immediate use if losses occur Question: If the spot rate decreases to A$ 0.8 / US$, BIllabong would like to maximiz its profits (operating cash flows in $AUD) by changing its selling prie and variable cost in US$ (NOT INCLUDING THE MAIN INPUT), but with this action restricted by the following constraints: i) Selling price cannot increase by more than 20% ii) Variable unit cost in US$ (not including the main input) can only be between 90% and 110% of the original cost; iii) Unit sold will reduce at the same rate of selling price increases. For example, unit sold will reduce by 10% if selling price increases by 10% Ensure that you report the following three variables that maximize BIllabong's profits (operating cash flows in $AUD) : 1. New Selling Price per unit 2. New Variable Cost in US$ (not including the main input) per unit 3. New Unit Sold Thank you.