(Solved) : 523 0 Ach Manitowoc Crane B Manitowoc Crane Us Exports Heavy Crane Equipment Several Chin Q32967370 . . .
523,0 ach. Manitowoc Crane (B). Manitowoc Crane (U.S.) exports heavy crane equipment to several Chinese dock facilities. Sales are currently 10,000 units per year at the yuan equivalent of $23,000 each. The Chinese yuan (renminbi) has been trading at Yuan7.70/s, but a Hong Kong advisory service predicts the renminbi will drop in value next week to Yuan8.40/, after which it will remain unchanged for at least a decade. Accepting this forecast as given, Manitowoc Crane faces a pricing decision in the face of the impending devaluation. It may either (1) maintain the same yuan price and in effect sell for fewer dollars, in which case Chinese volume will not change; or (2) maintain the same dollar price, raise the yuan price in China to offset the devaluation, and experience a 10% drop in unit volume. Direct costs are 75% of the U.S. sales price. not change or2 raintinot son ace a priof ne mnpenting eranin Additionally, financial management believes that if it maintains the same yuan sales price, volume will increase at 10% per annum through year eight. Dollar costs will not change. At the end of 8 years, Manitowoc’s patent expires and it will no longer export to China. After the yuan is devalued to Yuan8.40S, no further devaluations are expected. If Manitowoc Crane raises the yuan price so as to maintain its dollar price, volume will increase at only 2% per annum through year eight, starting from the lower initial base of 9,000 units. Again, dollar costs will not change, and at the end o eight years Manitowoc Crane will stop exporting to China. Manitowoc’s weighted average cost of capital is 10%. Given these considerations, what should be Manito ocs pricing policy CASE 1 lf Manito oc Crane maintains the same yuan ce and in effect sells for e ver dollars, the annual sales ice per unit s e to S 0 sales, or $23,000 x0.75 $17,250. Calculate the gross profits for years 1 through 4 in the following table: Round to the nearest dollar.) x Yuan7.70 S-Yuan os-S2 a 3. hedirect cost pe unit is75% of he Case 1 Year 1 Year 2 Year 3 Year 4 Sales volume (units) Sales price per unit 10,000 S21,083.33 $21,083.33 $ 21,083.33 S 21,083.33 Total sales revenue Direct cost per unit 17,250 $ 17,250 $ 17,250 S 17,250 Total direct costs Gross profits Show transcribed image text
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Answer to 523 0 Ach Manitowoc Crane B Manitowoc Crane Us Exports Heavy Crane Equipment Several Chin Q32967370 . . .
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