Manitowac Crane is a US company that exports heavy crane equipment to several Chinese dock facilities. Sales are currently 150 units per year at the yuan equivalent of $24,000 each. The yuan currently trades at 6.35 yuan per dollar, but you predict it will fall to 7 yuan per dollar soon and stay there the entire year. Assume direct unit costs are 75% of the original US sales price in either scenario. Calculate gross profits in dollars if you raise the yuan price to offset the devaluation (keeping the dollar price the same) and suffer a 15% drop in volume.

Manitowac Crane is a US company that exports heavy crane equipment to several Chinese dock facilities. Sales are currently 150 units per year at the yuan equivalent of $24,000 each. The yuan currently trades at 6.35 yuan per dollar, but you predict it will fall to 7 yuan per dollar soon and stay there the entire year. Assume direct unit costs are 75% of the original US sales price in either scenario. Calculate gross profits in dollars if you raise the yuan price to offset the devaluation (keeping the dollar price the same) and suffer a 15% drop in volume.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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