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# dollar-equivalent cost of a Toyota automobile

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Refer to attached graph.

1. Assuming that Toyota obtains all inputs from Japanese suppliers and that the yen/dollar exchange rate is 200 yen per dollar. What is the dollar-equivalent cost of a Toyota automobile? Show your work.

2. Assume that Toyota Inc. obtains all of its automobile inputs from Japanese suppliers. If the yen's exchange value appreciates from 200 yen = \$1 to 100 yen = \$1, what is the yen cost of a Toyota automobile? Show your work.

3. Assume that Toyota Inc. imports steel from U.S. suppliers, whose costs are denominated in dollars, while all other inputs are obtained from Japanese suppliers whose costs are denominated in yen. If the yen's exchange value appreciates from 200 yen = \$1 to 100 yen = \$1, what will the dollar-equivalent cost of a Toyota automobile be? Show your work.
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#### Solution Preview

Hello!

Question 1
If the exchange rate is 200 yen = \$1 and all the inputs come from Japanses suppliers, we must simply divide the costs of this inputs by 200 in order to obtain their dollar value:

Labor 1,200,000 yens 1,200,000/200 = \$6,000

Steel 800,000 yens 800,000/200 = \$4,000
Other materials 1,600,000 yens 1,600,000/200 = \$8,000
Total materical costs =\$12,000

Other costs 400,000 yens 400,000/200 = \$2,000

Total costs 4,000,000 yens = \$20,000

Question ...

#### Solution Summary

Find the dollar-equivalent cost of a Toyota automobile.

\$2.19