1. 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.

1. $0.3555/peso

2. $0.3578/peso

3. $0.4200/peso

4. $0.4173/peso

2. What would be the dollar price given that Antwerp had decided to keep the same peso price?

1. $31.28

2. $36.96

3. $31.48

4. $36.72

3. 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

• 12,500,000 units

4. If the correct answer to question 22 is $0.3523/peso, what would be Antwerps dollar gross profit in year two?

1. $49.99 million

2. $310 million

3. $372 million

4. $387.5 million