Problems 1 and 2 are based on the Spectrum Manufacturing AB case (scenarios 1, 2, and 3)

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Problems 1 and 2 are based on the Spectrum Manufacturing AB case (scenarios 1, 2, and 3) presented in the chapter. Calculate Spectrum’s economic exposure under the following new scenarios:

Scenario 4:

Sales and import prices rise; domestic materials substituted for imported materials; other variables remain the same.

Spectrum is able to raise the krona price of its sheet plastic to SEK 25 to exactly offset the effect of the devaluation.

Because of domestic materials substitutions, krona operating expenditures rise by only 4% relative to the base case.

Physical sales volume stays at its predevaluation level.

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