Suppose you & classmates are marketing team assembled by your Brazil based firm To estimate demand in the U.S. market for its newly developed product. The market Research firm you hired requires $150,000 to perform a thorough study. But your Group is informed that total research budget for the year is 3 million Brazilian real & That no more than 20% of the budget can be spent on any one project. 16 points a. If the current exchange rate is 5 real/$, will you have the market study Conducted? Why or why not? (show your calculations) b. If the current exchange rate is 3 real/$, will you have the market study Conducted? Why or why not? (show your calculations) c. At what exchange rate your decision from rejecting the proposed research project to accept the Project?

Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Open-economy Macroeconomics: Basic Concepts
Section: Chapter Questions
Problem 7PA
Question
Suppose you & classmates are marketing team assembled by your Brazil based firm
To estimate demand in the U.S. market for its newly developed product. The market
Research firm you hired requires $150,000 to perform a thorough study. But your
Group is informed that total research budget for the year is 3 million Brazilian real &
That no more than 20% of the budget can be spent on any one project. 16 points
a. If the current exchange rate is 5 real/$, will you have the market study
Conducted? Why or why not? (show your calculations)
b. If the current exchange rate is 3 real/$, will you have the market study
Conducted? Why or why not? (show your calculations)
c. At what exchange rate your decision from rejecting the proposed research project to
accept the
Project?
Transcribed Image Text:Suppose you & classmates are marketing team assembled by your Brazil based firm To estimate demand in the U.S. market for its newly developed product. The market Research firm you hired requires $150,000 to perform a thorough study. But your Group is informed that total research budget for the year is 3 million Brazilian real & That no more than 20% of the budget can be spent on any one project. 16 points a. If the current exchange rate is 5 real/$, will you have the market study Conducted? Why or why not? (show your calculations) b. If the current exchange rate is 3 real/$, will you have the market study Conducted? Why or why not? (show your calculations) c. At what exchange rate your decision from rejecting the proposed research project to accept the Project?
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