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(a)ABC is considering expanding its sales of orange juice overseas

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(a)ABC is considering expanding its sales of orange juice overseas. If the product is produced in ABC’s Australian brunch with cost 2.10 Australian dollars, ship to UK, where it can be sold for 1.52 British pound. What is the profit measured by US dollars on the sale?

 

On 11/23/2020, the exchange rates are as follows:

 

1 British Pound = USD $1.33

 

1 Australian dollar = 0.55 British Pound

 

$1 USD = 1.37 Australian dollar

 

$1 USD = 104.33 Japanese Yen

 

 

(b)If ABC produces a liter of orange juice in its US headquarters and ship it to Japan for USD $1.55 per unit. If the firm wants a 30% markup on the project, what should be the price of the juice sold in Japan measured by Yen, if using the exchange rate as shown above?

 

(c)If the shipped orange juice in Japan is actually sold for 215 Yen, by PPP, what is the exchange rate between USD and Yen (Yen/USD $1) implied?