Sophia is an exporter of designer and exclusive furniture from Nevada. Her business earns stable profits, as the interest rate has more or less remained unchanged in the past several years. However, mid-quarter, the Federal Reserve hikes the interest rate. What impact do you think will the change in interest rates have on her profits? A.
The exchange rate will depreciate, leading to a decline in her profit margin.
B.
The exchange rate will remain stable, leading to a rise in her profit margin.
C.
The exchange rate will depreciate, leading to a rise in her profit margin.
D.
The exchange rate will appreciate, leading to a rise in her profit margin.

Steele bicycle manufacturing company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. steele produces and sells only 10,000 bikes each year. due to the low volume of activity, steele is unable to obtain the economies of scale that larger producers achieve. for example, steele could buy the handlebars for $31 each: they cost $34 each to make. the following is a detailed breakdown of current production costs: after seeing these figures, steele's president remarked that it would be foolish for the company to continue to produce the handlebars at $34 each when it can buy them for $31 each. calculate the total relevant cost. do you agree with the president's conclusion?

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Newton industries is considering a project and has developed the following estimates: unit sales = 4,800, price per unit = $67, variable cost per unit = $42, annual fixed costs = $11,900. the depreciation is $14,700 a year and the tax rate is 34 percent. what effect would an increase of $1 in the selling price have on the operating cash flow?