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Question - A Toyota motorcar manufactured in Japan costs ¥1,500,000. Florida Motors in South Florida, USA, imports those vehicles from Japan. The current exchange rate is ¥120/$. However, that exchange rate is expected to change to ¥114/$ over the next year.
Required -
1. What is the current cost of the motorcar to Florida Motors?
2. What will be the price of the vehicle at the end of the year if there is a 100% pass-through of exchange rate?
3. What will be the price of the vehicle at the end of the year if there is a 75% pass-through of exchange rate?
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