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 the yuan price in China to offset the devaluation, and experiences 10% drop in unit volume what will be the firm's gross profits?__________________
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
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 the yuan price in China to offset the devaluation, and experiences 10% drop in unit volume what will be the firm's gross profits?__________________
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