Scenario: Color-Me-Green Inc. Color-Me-Green Inc., a U.S.-Based Clothing Merchant, Has Started Doing Business

Scenario: Color-Me-Green Inc.
Color-Me-Green Inc., a U.S.-based clothing merchant, has started doing business internationally. Having subsidiaries in several countries, the company must integrate financial information from all its subsidiaries with the U.S. home office at the end of the year.
-Suppose Country A has a currency called the Pulse (P) .At the beginning of the year,the exchange rate between the Pulse and the U.S.dollar was P150/$.The inflation rate in Country A is running at an annual rate of 250 percent,whereas inflation in the U.S.is running at 2 percent.Which of the following would most likely be the new exchange rate that Color-Me-Green can expect at the end of the year?

A) P525/$
B) P514.70/$
C) P43.71/$
D) $43.71/P

Correct Answer:

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