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?

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter29: Exchange Rates And International Capital Flows
Section: Chapter Questions
Problem 16RQ: Does a higher rate of return in a nations economy, all other things being equal, affect the exchange...
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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