1. Assume the initial exchange rate between the US dollar and the Euro is $1.40/Euro (7143 Euross1). Assume that the exchange rate increases to $1.50/Euro. What does this increase mean from the US perspective? What does this increase mean from the European perspective? Explain and show what effect this change in the exchange rate will have in each of the following situations. a. An American firm, receiving a payment of 100m Euros from its German subsidiary, wants to know what effect the change in the exchange rate will have on the dollar value of this payment b. Volkswagen of America purchases cars from its German parent company. The price of these cars is 24,000 Euros/car. Since VW ofAmerica does business in dollars, it wants to know what effect the change in the exchange rate will have on the dollar cost of purchasing a car. c. The current selling price of a bushel of American wheat if $7.00. What effect will the change in the exchange rate have on the selling price of bushel of American wheat in Euros. d. A German has signed an agreement to purchase a factory in the US for S200m. What effect will the change in the exchange rate have on the cost of purchasing the factory in Euros? In each case, show and explain your work.] 2. Assume that the exchange rate decreases to $1.20/Euro. What does this decrease mean from the US perspective? What does this decrease mean from the European perspective? Explain and show what effect this change in the exchange rate will have in each of the situations described above