Question

Suppose Jaguar (headquartered in the UK) sells its XF model in the USA for $80,000 and currently it’s selling 4,000 units annually. Also, the current exchange rate is $1.6 per pound. Calculate Jaguar’s sales revenue both in dollars and pounds. what will happen to sales revenue in dollars and pounds if pound appreciates to $2.0 per pound, assuming Jaguar keeps charging the same price in the USA and keeps selling the same number of cars? Generalize how currency appreciation affects the corporate bottom line.

Answer 1

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