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Determine the australian dollar price of that car one year

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Reference no: EM132585003

A German car now costs €50,000. The spot exchange rate is €0.7143/A$. The expected inflation rates in Australia and Germany are, respectively,0% and 2.0%. A$ is the home currency.

Question i. Determine the Australian dollar price of that car now.

Question ii. Determine the Australian dollar price of that car one year from now if there is an 80% exchange rate pass-through.

Reference no: EM132585003

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