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A box of candy costs 28.80 Swiss francs in Switzerland and $20
in the United States. Assuming that purchasing power parity (PPP)
holds, what is the current exchange rate?
Suppose one year ago, Hein Company had inventory in Britain
valued at 240,000 pounds. The exchange rate for dollars to pounds was
1£ = 2 U.S. dollars. This year the exchange rate is 1£ = 1.82 U.S.
dollars. The inventory in Britain is still valued at 240,000 pounds.
What is the gain or loss in inventory value in U.S. dollars as a result of
the change in exchange rates?