Purchasing power parity theory

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Reference no: EM131765030

Assume a Big Mac sells for $4.39 in the United States and Ps62.5 in Mexico, what is the Ps/$ exchange rate according to the purchasing power parity theory?

Ps13.29/$1

Ps.0752/$1

Ps14.24/$1

Ps.0702/$1

Ps14.32/$1

You are debating between spending a week in Brazil or a week in Chile. You've estimated the cost of the Brazilian trip at 56,300 reals and the Chilean trip at 13.6 million pesos. The currency per U.S. dollar is 2.5658 reals and 609.10 pesos. If you prefer the less expensive trip, as measured in U.S. dollars, you should travel to _____ because you can save ____.

Brazil; you can save $518.74

Chile; you can save $384.29

Chile; you can save $613.33

Brazil; you can save $385.55

Brazil; you can save $460.45

The Art Works needs to raise $6.2 million for a new facility. Assuming they issue new equity shares via a general cash offering, they expect to incur administrative costs of $412,000 in addition to the underwriting spread of 7.8 percent. If the offer price turns out to be $16 a share, how many shares need to be sold to finance the new facility?

448,210 shares

405,141 shares

487,923 shares

454,743 shares

406,211 shares

Reference no: EM131765030

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