CASE 1 If Richland Crane maintains the same yuan price and in effect sells for fewer dollars, the annual sales price per unit is equal to (USD24,000x CNY8.20/USD1.00) + CNY9.20/USD1.00=USD21,391.3. The direct cost per unit is 75% of the sales, or USD24,000 x 0.75=USD18,000. Calculate the gross profits for years 1 through 4 in the following table: (Round to the nearest dollar.) Case 1 Sales volume (units) Sales price per unit Total sales revenue Direct cost per unit Total direct costs Gross profits USD USD USD Year 1 10,000 21,391.3 USD 18,000 USD USD Year 2 21,391.3 USD 18,000 USD USD Year 3 TEL 21,391.3 USD 18,000 USD USD Year 4 10.00 21,391.3 18,000
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- Richland Crane (B). Richland Crane (U.S.) exports heavy crane equipment to several Chinese dock facilities. Sales are currently 16,000 units per year at the yuan equivalent of USD25,000 each. The Chinese yuan (CNY) has been trading at CNY8.50 = USD1.00, but a Hong Kong advisory service predicts the renminbi will drop in value next week to CNY9.40 = USD1.00, after which it will remain unchanged for at least a decade. Accepting this forecast as given, Richland Crane faces a pricing decision in the face of the impending devaluation. It may either (1) maintain the same yuan price and in effect sell for fewer dollars, in which case Chinese volume will not change; or (2) maintain the same dollar price, raise the yuan price in China to offset the devaluation, and experience a 10% drop in unit volume. Direct costs are 75% of the U.S. sales price. Additionally, financial management believes that if it maintains the same yuan sales price, volume will increase at 12% per annum through year eight.…Richland Crane (A). Richland Crane (U.S.) exports heavy crane equipment to several Chinese dock facilities. Sales are currently 16,000 units per year at the yuan equivalent of USD23,000 each. The Chinese yuan (CNY) has been trading at CNY8.30=USD1.00, but a Hong Kong advisory service predicts the yuan will drop in value next week to CNY9.00 USD1.00, after which it will remain unchanged for at least a decade. Accepting this forecast as given, Richland Crane faces a pricing decision in the face of the impending devaluation. It may either (1) maintain the same yuan price and in effect sell for fewer dollars, in which case Chinese volume will not change; or (2) maintain the same dollar price, raise the yuan price in China to offset the devaluation, and experience a 10% drop in unit volume. Direct costs are 75% of the U.S. sales price. a. What would be the short-run (one-year) impact of each pricing strategy? b. Which do you recommend? a. If Richland Crane maintains the same yuan price and…Manitowoc Crane (US) exports heavy crane equipment to several Chinese dock facilities. Sales are currently 18,000 units per year at the yuan equivalent of $23,000 each. The chinese yuan (renminbi) has been trading at Yuan 7.80/$, but a Hong Kong advisory service predicts the renminbi will drop in value next week to Yuan 8.50/$ after which it will remain unchanged for at least a decade. Accepting this forecast as given, Manitowoc Crane faces a pricing decision in the face of the impending devaluation. It may either (1) maintain the same yuan price and in effect sell for fewer dollars, in which case Chinese volume will not change or (2) maintain the same dollar price, raise the yuan price in China to offset the devaluation and experience a 10% drop in unit volume. Direct costs are 75% of the US salesd price. If Manitowoc Crane maintains the same yuan price and same unit volume, what will be the firm's gross profits?_________ If Manitowoc Crane maintains the same dollar price, raises…
- Suppose that a US-based company is buying Chinese goods. Current exchange rate for Chinese Yuan is 0.15 USD. The price of goods is ¥13,000 per unit. The company is buying 800 units per year with a fixed contract for the next two years. Suppose that Chinese Yuan appreciate to 0.2 USD in the next year. The US importer will respond to this by lowering the demand to 600 units in the third year. What cash flow will be reflected on the balance of payments at the end of the third year? Your Answer:You are required to forecast the expected change in the exports to the USA from China and Japan. The spot rate is 200 Japanese yen per yuan. The spot rate 6-months before was 180 Japanese yen per Yuan. The value of Chinese yuan is tied with the US$ and it will be. a. From China remain same, from Japan will increase. b. From China will increase, from Japan will remain same. c. From China remain same, from Japan will decrease. d. From China will decrease, from Japan will remain same. с. Answer OA Submit U: 0.0kB/s ch D: 0.0 kB/s DELLM2 Manitowoc Crane (A). Manitowoc Crane (U.S.) exports heavy crane equipment to several Chinese dock facilities. Sales are currently 12,000 units per year at the yuan equivalent of $24,000 each. The Chinese yuan (renminbi) has been trading at Yuan7.60/$, but a Hong Kong advisory service predicts the renminbi will drop in value next week to Yuan8.50/$, after which it will remain unchanged for at least a decade. Accepting this forecast as given, Manitowoc Crane faces a pricing decision in the face of the impending devaluation. It may either (1) maintain the same yuan price and in effect sell for fewer dollars, in which case Chinese volume will not change; or (2) maintain the same dollar price, raise the yuan price in China to offset the devaluation, and experience a 10% drop in unit volume. Direct costs are 75% of the U.S. sales price. a. What would be the short-run (one-year) impact of each pricing strategy? b. Which do you recommend? a. If Manitowoc Crane maintains the same yuan…
- Last week, 13 Mexican pesos could purchase one U.S. dollar. This week, it takes 11 Mexican pesos to purchase one U.S. dollar. This change in the value of the dollar will ________ net exports from the United States to Mexico and ________ Mexico aggregate demand. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increaseA Northwest party products manufacturer has production facilities in Spokane, WA and Bangladesh. Both facilities have capacities of 1 million units each per year. The cost of production and distribution of party supplies from Spokane is $1/unit. The cost of production and distribution from Bangladesh is 60 Taka/unit. (Current exchange rate is $1=85 Taka). Over the next two years the exchange rate is expected to strengthen by 10% with a 0.5 probability and weaken by 10% with a probability of 0.5. The expected demand this year is about 1.8 million units. Over the next two years the demand is expected to increase by 10% with a probability of 0.5 and decrease by 5% with a probability of 0.5. If demand is more than the capacity of the two plants then the remaining supplies are acquired from a competitor for $2/unit. What is the NPV of total cost with the current manufacturing setup? The company is considering increasing the capacity of the Bangladesh plant by 500,000 units at a fixed…Lalua Co is a US firm has planning to export its products to Singapore since its decision to supplement its declining U.S. sales by exporting there. Furthermore, Lalua Co. also has recently begun exporting to a retailer in United Kingdom. Below are the details of transactions for Lalua Co. through out of the year: - i. Blades has forecasted sales in the United States of 520,000 pairs of Speedos at regular prices which is $115; exports to Singapore of 180,000 pairs of speedos for SGD25 a pair; and exports to the United Kingdom of 200,000 pairs of Speedos for £80 per pair. ii. Cost of goods sold for 800,000 pairs of speedos are incurred in Singapore with the price of SGD 15; the remainder is incurred in the United States, where the cost of goods sold per pair of Speedos runsapproximately $70. iii. Fixed cost are $2 million and variable operating expenses other than costs of goods sold represent approximately 12 percent of U.S. sales. All fixed and variable operating expenses other than…
- Suppose your company imports computer motherboards from Singapore. The exchange rate is $1.4073 per Singapore dollar. You have just placed an order for 35,062 motherboards at a cost to you of S158 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $113 each. Calculate your profit if the exchange rates goes down by 14.51% over the next 90 days.Suppose your company imports computer motherboards from Singapore. The exchange rate is $1.3595 per Singapore dollar. You have just placed an order for 39328 motherboards at a cost to you of S146 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $118 each. Calculate your profit if the exchange rates goes down by 12.23% over the next 90 days. NOTE: Enter the number rounding to four DECIMALS. If your decimal answer is 0.034576Global Electronics Inc. invested $1,000,000 to build a plant in a foreign country. The labor and materials used in production are purchased locally. The plant expansion was estimated to pro-duce an internal rate of return of 20% in U.S. dollar terms. Due to a currency crisis, the currency exchange rate between the local currency and the U.S. dollar doubled from two local units per U.S. dollar to four local units per U.S. dollar. Write a brief memo to the chief financial officer, Tom Greene, explaining the impact that the currency exchange rate change would have on the project’s internal rate of return if (1) the plant produced and sold product in the local economy only, and (2) the plant produced all product locally and exported all product to the United States for sale.