Question
Use the following information to answer the next four questions: Antwerp Corp. of the United States exports electronic devices to Argentina. Sales are currently 8,000,000
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Use the following information to answer the next four questions:
Antwerp Corp. of the United States exports electronic devices to Argentina. Sales are currently 8,000,000 units per year at the current peso equivalent of $34 each. The spot Peso/dollar exchange rate is $0.3864/peso but the dollar is expected to appreciate by 8% in a few days and then stay constant for the coming two years. Antwerp Corp. decides to maintain the same peso price. Given this choice, Antwerp expects a growth rate in unit sales of 25% per year for the coming two years. Direct costs per unit are constant at $27. Antwerp weighted average cost of capital is 15%.
Calculate the value of the peso after the 8% appreciation.
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$0.3555/peso
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$0.3578/peso
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$0.4200/peso
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$0.4173/peso
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What would be the dollar price given that Antwerp had decided to keep the same peso price?
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$31.28
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$36.96
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$31.48
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$36.72
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How many units would the company be able to sell in year two?
8,000,000 + (8,000,000 * 0.25) = 10,000,000
10,000,000 + (10,000,000 * 0.25) = 12,500,000
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12,500,000 units
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If the correct answer to question 22 is $0.3523/peso, what would be Antwerps dollar gross profit in year two?
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$49.99 million
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$310 million
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$372 million
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$387.5 million
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