How does impact the profits

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Reference no: EM133283816

Question: Consider a U.S. company that makes planes. The company does all its manufacturing in the U.S. and pay its suppliers and employees a fixed number of US dollars. The company sells its planes in South Africa at a fixed price of South African Rands. The company's profits are all recorded in US dollars (after converting Rand into dollars).

Suppose the US dollar suddenly depreciates against the South African Rand. How does this impact the profits (revenue minus costs) of the company in US dollar terms?

-Profit in US dollars is unchanged

-Profit in US dollars go down

-Profit in US dollars go up

-There is insufficient information

Reference no: EM133283816

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