A vehicle manufacturer headquartered in California produces its best-selling model entirely in the U.S. The local price of this vehicle is $59,250, while and the price of the same model in Europe is â‚¬50,000. The company’s pricing policy is to apply a pass-through rate of 65% with regards to exchange rate changes. What would be the new price in Europe if the exchange rate were to suddenly change from $1.1850/â‚¬ to $1.2750/â‚¬?
In 2018, Toyota began exporting to Russia a certain configuration of a Toyota Corolla that, until then, was sold exclusively in Japan (where it is produced and has a price tag of Â¥2,800,000). At the time, the spot exchange rate was 1.40 Japanese yen (Â¥) per one Russian ruble (). The Japanese company decided that the introduction price of this export will be set at P2,000,000. However, the company also decided that to address future changes in the Â¥/P exchange rate, it will start applying a pass-through rate of 60.0% to determine the price of this export in the Russian market. Suppose that one year later, a Corolla cost P1,800,000 in Russia. What is the Â¥/P exchange rate at that time?