What is the impact on cash flow in euros and dollars

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Reference no: EM132048642

Economic Exposure (Lecture 5): In the example in the notes on Trident Europe (Lecture 6), suppose half the sales (500,000 units) are domestic sales and the other half are export sales. The firm decides not to change its domestic price of €12.80/unit, but raises its export price in euros from €12.80 to 15.36/unit. Volume in both markets remains the same since no buyer perceives that the price has changed. What is the impact on cash flow in euros and dollars? What is the reasoning for the change in prices of exported goods?

Reference no: EM132048642

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