Question: Please help me to answer this question in full details. Thank you in advance. Mask-up Ltdis an Austratian wholesaler of medical masks is assessing whether

Please help me to answer this question in full details. Thank you in advance.
Please help me to answer this question in full details. Thank you

Mask-up Ltdis an Austratian wholesaler of medical masks is assessing whether to source high quanty masks from elther the U.S. or China (the same quality masks are avaliable from both countries). Mask-up Ltd is concerned about exchange rate fluctuations. The U.S. uses a foating exchatre rate, while China uses fixed exchange rate. Economic conditions of the countries as shown below. Interest rates: Australia, 1.6\%; US, 2.3\%; and China, 3.7%. Inflation rates (annual); Australia, 2.9\%; US, 4.7\%; and China, 1.0\%. Based on the above information please answer the following. Required: A. If Mask-up Ltd proceeds to source masks from US, how will the above two economic conditions affect the exchange rate, and hence, sales, expenses, and profits of Mask-up Ltd? (8 marks) B. The management of the supplier company in US is complaining that they are at a disadvantage compared to the company in China, because US uses floating exchange rate. Explain one rease why the company in US may be disadvantaged and explain one economic benefit for China us fixed exchange rate. (6 marks) c. Identify which country you would source the masks from and explain why. (3 marks) ease label your responses as Part A, B or C. and start each part on a new line

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!