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How many of the foreign currency

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Use the table below, which shows how many of the foreign currency units are required to buy one US dollar, to answer the following.

Country June 2001 June 2006

Brazil (real) 2.479 2.188

China (yuan) 8.277 8.114

Mexico (peso) 9.104 11.421

You and a friend, Yi, are considering a summer vacation to one of two locales: Mexico or Brazil. Mexico's currency unit is the Mexican peso and the real is used in Brazil. You live in the United States and Yi lives in China. The cost of the hotel is denominated in local currency units. You and Yi are trying to choose the locale with the lowest hotel expenses. The price of a hotel room is 200 reals per night in Brazil and 800 pesos per night in Mexico. Assume these prices remain unchanged between 2001 and 2006.

a. Calculate the U.S. dollar price of a hotel room in Brazil and in Mexico for June 2001. Calculate these prices for 2006. Based on your answers, where would you spend your vacation in June 2001? In June 2006?

b. For June 2001 and June 2006, calculate the following:

i. Real/Yuan exchange rate (The real price of one Yuan)

ii. Peso/Yuan exchange rate, (The peso price of one Yuan)

c. Using your answers from (b) and the information in the table, calculate the Chinese Yuan price of a hotel room in Brazil and in Mexico for June 2001. Also calculate these prices for 2006. Based on your answers, where would Yi prefer to spend her vacation in June 2001? In June 2006?

Reference no: EM133128150

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