Q 5(b) [10 Marks] Serena lives in Buenos Aires and is planning to visit the Machu Picchu in Peru for her summer vacation.
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Q 5(b) [10 Marks]

Serena lives in Buenos Aires and is planning to visit the Machu Picchu in Peru

for

her summer vacation. The trip will take place in 3 months and is expected to cost

30,000 Peruvian New Sol. The current exchange rate between the dollar and the

peso is 7.80 ARS/USD whereas the exchange rate between the dollar and the sol is

2.76 PEN/USD. Note that USD is the base currency for both exchange rates.

Inflation is expected to hit 30% on annual basis in Argentina, 5% on annual basis in

Peru, and 2% on annual basis in US. The 3-month nominal interest rate in Argentina

is 25% per annum, and she will use PPP to forecast future exchange rates.

What is the total amount of pesos she has to save today to pay for her trip?

Top Answer

Serena saved money 5217 peso. If consider... View the full answer

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Page : (
Answer
Date:
Serena lives in Buenos Aires
Planning to visit macchee picchu
currenly in Buenos Aires = Argentine peso
Currency in machu picchu pery =
Sol ( PEN
Serena required for trip
=...

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