An international corporation located in Country A is considering a project in the United States. The currency in Country A, say X, has been strengthening relative to the U.S. dollar; specifically, the average devaluation of the U.S. dollar has been 2.82.8% per year (which is projected to continue). Assume the present exchange rate is 6.96.9 units of X per U.S. dollar. a. What is the estimated exchange rate two years from now? b. If, instead, currency X was devaluing at the same rate (2.82.8% per year) relative to the U.S. dollar, what would be the exchange rate three years from now?

An international corporation located in Country A is considering a project in the United States. The currency in Country A, say X, has been strengthening relative to the U.S. dollar; specifically, the average devaluation of the U.S. dollar has been 2.82.8% per year (which is projected to continue). Assume the present exchange rate is 6.96.9 units of X per U.S. dollar. a. What is the estimated exchange rate two years from now? b. If, instead, currency X was devaluing at the same rate (2.82.8% per year) relative to the U.S. dollar, what would be the exchange rate three years from now?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter6: Managing In The Global Economy

Section: Chapter Questions

Problem 12E

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