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Which currency may be overvalued based on purchasing power

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Assume that Nike generated 2% of its total revenue from Mexico in 2020 totaling $748.06 million when translated back to USD. Total revenue in Mexico is expected to increase by 4.25% from 2020 to 2021. The 2020 US$/MXN Peso exchange rate was 1 USD=23.45 MXN, and the MXN Peso is expected to depreciate against the USD by 4 3.5% in 2021. What is the amount of revenue in USD that Nike will recognize from Mexico in 2021? (5 points) 10. Assume the price of 2 liters of Coca-Cola in Denver, Colorado is $1.99 and in Mexico City it costs 45 pesos. The current foreign exchange rate is 1 USD = 25.30 MXN Pesos.

Problem 1: Based on the purchasing power parity theory which currency may be overvalued?

Reference no: EM132961043

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