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Part $1$

Manitowoc Crane$($A$).$Manitowoc Crane$($U$.$S$.)$ exports heavy crane equipment to several Chinese dock facilities. Sales are currently $18$ comma $000$ units per year at the yuan equivalent of $$$$23$ comma $000$ each. The Chinese yuan$($renminbi$)$ has been trading at Yuan$7\mathrm{.}70/$$$,$ but a Hong Kong advisory service predicts the renminbi will drop in value next week to Yuan$8\mathrm{.}40/$$$,$ after which it will remain unchanged for at least a decade. Accepting this forecast as$$ given, Manitowoc Crane faces a pricing decision in the face of the impending devaluation. It may either$(1)$ maintain the same yuan price and in effect sell for fewer$$ dollars, in which case Chinese volume will not$$ change; or$(2)$ maintain the same dollar$$ price, raise the yuan price in China to offset the$$ devaluation, and experience a$10\%$ drop in unit volume. Direct costs are$75\%$ 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?