Assume that you are the CFO of a small Australian-based automotive components manufacturer, OZPRTS Co. As a result of the closure of the major automotive manufacturers' plants in Australia (your former customers), OZPRTS Co. has taken on a large contract to produce 200,000 aluminium transmission casings per annum for a large EU-based automotive manufacturer with primary operations in Germany.

OZPRTS Co.'s CEO has guaranteed a fixed euro price on the casings over the first three years of the contract. You are greatly concerned about the possibility of increases in the price of aluminium for two reasons. One is the increased prices for metal as a result of the increases in its global demand given its use in the automotive and power transmission industries. The other is the potential for the AUD price to increase due to the impact of adverse changes in exchange rates against the Australian dollar. You are also concerned with potential currency exposures on the revenue side of the contract.

a) Identify and discuss the exposures that OZPRTS Co. faces on the input cost side of this contract over the next three years.  

i) identify the currency in which aluminium is priced (on global markets) and thus the exchange rate to which OZPRTS Co. is exposed due to its required purchases of aluminium over the next three years 

 ii)collect data on both aluminium prices and the appropriate exchange rate and, using charts, discuss the variability in these two prices/rates. (Note: A historical aluminium price chart can be viewed on https://www.lme.com/en- GB/Metals/Non-ferrous/Aluminium#tabIndex=2. The Reserve Bank of Australia provides data on exchange rate, which can be downloaded from https://www.rba.gov.au/statistics/historical-data.html#exchange-rates.) 

1.  iii)use appropriate diagrams to illustrate OZPRTS Co.'s exposure on purchases of aluminium to each of the global price of aluminium and the appropriate exchange rate separately.
2.  

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