Jaguar Has Full Manufacturing Costs of Their S-Type Sedan of £22,803

question 47

Multiple Choice

Jaguar has full manufacturing costs of their S-type sedan of £22,803. They sell the S-type in the UK with a 20% margin for a price of £27,363. Today these cars are available in the US for $55,000 which is the UK price multiplied by the current exchange rate of $2.01/£. Jaguar has committed to keeping the US price at $55,000 for the next six months. If the UK pound appreciates against the USD to an exchange rate of $2.15/£, and Jaguar has not hedged against currency changes, what is the percentage margin the company will realize given the new exchange rate?

• A)20.0%
• B)15.3%
• C)12.4%
• D)7.2%

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Definitions:

High-Income Economies

Economies categorized by a high gross national income per capita, indicating a high standard of living and economic productivity.

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