Theresa Nunn is planning a 30-day vacation on Pulau Penang, Malaysia, one year from now. The present charge for a luxury suite plus meals in Malaysian ringgit (RM) is RM1,045/day. The Malaysian ringgit presently trades at RM3.1350/$. She figures out the dollar cost today for a 30-day stay would be $10,000. The hotel informed her that any increase in its room charges will be limited to any increase in the Malaysian cost of living. Malaysian inflation is expected to be 2.75% per annum, while U.S. inflation is expected to be only 1.25%. a.How many dollars might Theresa expect to need one year hence to pay for her 30-day vacation? b.By what percent has the dollar cost gone up? Why? Assumptions Value Charge for suite plus meals in Malaysian ringgit (RM) 1,045.00 Spot exchange rate (RM/$) 3.1350 US$ cost today for a 30 day stay Malaysian ringgit inflation rate expected to be 2.750% U.S. dollar inflation rate expected to be 1.250% a.How many dollars might you expecte to need one year hence for your 30-day vacation? Spot exchange rate (ringgit per US$) Malaysian ringgit inflation rate expected to be U.S. dollar inflation rate expected to be Spot (expected in 1 year) = Spotx( 1 + RM inflation) / ( 1 + US inflation) Expected spot rate one year from now based on PPP (RM/$) Hotel charges expected to be paid one year from now for a 30-day stay (RM) US dollars needed on the basis of these two expectations: b.By what percent has the dollar cost gone up? Why? New dollar cost Original dollar cost Percent change in US$ cost