Results of exchange rate changes Early in September 1983, it took 260 Japanese y

Question

Results of exchange rate changes

Early in September 1983, it took 260 Japanese yen to equal $1. Nearly 28 years later, in August 2011, that exchange rate had fallen to 110 yen to $1. Assume that the price of a Japanese-manufactured automobile was $8,750 in September 1983 and that its price changes were in direct relation to exchange rates.

Has the price, in dollars, of the automobile increased or decreased during the 28-year period because of changes in the exchange rate?
-Select-increaseddecreasedItem 1

What would the dollar price of the automobile be in August 2011, again assuming that the car's price changes only with exchange rates? Round your answer to the nearest cent.
$  

Explanation / Answer

The value of automobile "Decrease"In dollars.Because dollar is depreciating.

Dollar price of automobile = 8750 *110 /260

                                     = 8750 / .42308

                                     = $ 3,701.95

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