A Japanese firm produces a particular model of vehicle in Japan and sells it in the...

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A Japanese firm produces a particular model of vehicle in Japan and sells it in the United States. The production cost per vehicle is ¥800,000 and the vehicle is sold in the United States at a price of $10,000. Answer the questions below on the following assumptions: (1) there are no taxes in either country; (2) there are no transaction costs; (3) production cost does not change for the Japanese firm; and (4) the Japanese firm can exchange its dollar revenue back to the Japanese yen at the stated exchange rates. If the exchange rate changes from $1.00 ¥100 to $1.00 = ¥120, how much does the Japanese firm's profit change in percentage? A Japanese firm produces a particular model of vehicle in Japan and sells it in the United States. The production cost per vehicle is ¥800,000 and the vehicle is sold in the United States at a price of $10,000. Answer the questions below on the following assumptions: (1) there are no taxes in either country; (2) there are no transaction costs; (3) production cost does not change for the Japanese firm; and (4) the Japanese firm can exchange its dollar revenue back to the Japanese yen at the stated exchange rates. If the exchange rate changes from $1.00 ¥100 to $1.00 = ¥120, how much does the Japanese firm's profit change in percentage?

Answer rating: 100% (QA)

SOLUTION Change in Profit Initial Profit New Profit Change in Profit 2000 133333 66666 Change in Pro... View the full answer