Phillips NV produces DVD players and exports them to the United States. Last year the exchange rate was $1.25/euro and Phillips

Question

3 years ago

11

Phillips NV produces DVD players and exports them to the United States. Last year the exchange rate was $1.25/euro and Phillips

charged 120 euro per player in Euroland and $150 per DVD player in the United States. Currently the spot exchange rate is $1.45/euro and Phillips is charging $160 per DVD player. What is the degree of pass through by Phillips NV on their DVD players?

Business

1 answer:

vichka [17] · Answer 1 · 2022-04-03T15:13:48+03:00

Answer: The exchange rate pass through is 41.7 = 6.666666667%÷16%

Explanation:

Currently, from last year to the current year, there has been a 16% increase change in the exchange rate and a 6.667% change in the price. The exchange rate pass through is 41.7 = 6.666666667%÷16%

For every increase in 1% of the exchange rate, there has been a 41.7% increase in the current price of the DVD player.

Phillips NV produces DVD players and exports them to the United States. Last year the exchange rate was​ $1.25/euro and Phillips

Phillips NV produces DVD players and exports them to the United States. Last year the exchange rate was $1.25/euro and Phillips