Solution-Operating costs in foreign currency

Operating costs in foreign currency

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Reference no: EM133116541

Suppose the EUR is expected to appreciate by 5% in real terms against the USD. Consider the following about GM [US ?rm): An average of 70% of raw materials and components are imported by GM from Spain. Raw materials and components comprise 65% of total product costs. Foreign wages expenses accounts for 22% of production costs. The balance comes from other operating costs in foreign currency. What was the likely impact of a real appreciation of the EUR on GM using Spain as an export market?

Reference no: EM133116541

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Operating costs in foreign currency

Reference no: EM133116541

Reference no: EM133116541

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