Results of exchange rate changes Early September 1983, it took 265 Japanese yen

Question

Results of exchange rate changes Early September 1983, it took 265 Japanese yen to equal $1. Nearly 28 years later, in August 2011, that exchange rate had fallen to 116 yen to $1. Assume that the price of a Japanese manufactured automobile was $10,500 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? 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

Dollar Japanese Yen 1 Yen = $ Exchange Rate in Sep 1983                                 1                           265 0.0038 Automobile price in Sep 1983                      10,500               2,782,500 Exchange Rate Aug 2011                                 1                           116 0.0086 Automobile price in Sep 1983                      23,987               2,782,500               23,987.07 a Price in $ of the automobile has increased as Yen has become stonger in Aug 2011 as compared to Sep 1983 b $ value of the Automobile in Aug 2011 will be $23,0987.07

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