Hurte$-$Paroxysm Products, Inc. $($A$).$ Hurte$-$Paroxysm Products, Inc. $($HP$)$ of the United States, exports computer

printers to Brazil, whose currency, the reais $($BRL$)$ has been trading at BRL$3\mathrm{.}40=$ USD$1\mathrm{.}00.$ Exports to Brazil are

currently $60,000$ printers per year at the reais$-$equivalent of $$230$ each. A rumor exists that the reais will be devalued

against the dollar to BRL$4\mathrm{.}00$ within two weeks by the Brazilian government. Should the devaluation take place, the

reais is expected to remain unchanged for another decade.

Accepting this forecast as given, HP faces a pricing decision that must be made before any actual devaluation:

HP may either $(1)$ maintain the same reais price and, in effect, sell for fewer dollars, in which case Brazilian volume will

not change, or $(2)$ maintain the same dollar price, raise the reais price in Brazil to compensate for the devaluation, and

experience a $20\%$ drop in volume. Direct costs in the United States are $60\%$ of the U$.$S$.$ sales price.

a$.$ What would be the short$-$run $($one$-$year$)$ impact of each pricing strategy?

b$.$ Which do you recommend?

a$.$ If HP maintains the same reais price and same unit volume, what will be the firm's gross profits?

$$,($Round to the nearest dollar.$)$

Answer both of the questions.