Using the following cost and revenue information shown for Kiwi Family Inc., a U.S.-based company, determine how the costs, revenue, and earnings items would be affected by three possible exchange rate scenarios for the New Zealand dollar against the U.S. dollar (NZDUSD): (1) 0.50, (2) 0.55, and (3) 0.60. (Assume U.S. sales will be unaffected by the exchange rate.) Assume that NZD earnings will be remitted to the U.S. parent company at the end of the period.

Revenue and Cost Estimates: Kiwi Family Inc. (in millions of USD and NZD)

U.S. Business NZ Business

Sales USD 900 NZD 800

Cost of Goods Sold 600 100

Gross Profit USD 300 NZD 700

Operating Expenses 300 0

Earnings Before Interest and Taxes (EBIT) USD 0 NZD 700

Interest Expense 200 0

EBT USD 200 NZD 700

From its parent companys (located in the U.S.) perspective, Does Kiwi Family behave like an exporter or an importer? Why? (15 points)