Problem 2 25 points HP a US based corporation exports computer printers to Brazil, whose currency, the reais (symbol R$} has been trading at R$3.40lUS$. Exports to Brazil are currently 50,000 printers per year at the reais equivalent of $200 each. A strong rumor exists that the reais will be devalued to R$4.00!$ 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 which 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 U.S. are 60% ofthe U.S. sales price. What would be the short-run (one-year) implication of each pricing strategy? Which do you recommend