- Malaysian Island Resort Theresa Nunn Is Planning A 30 Day Vacation On Pulau Penang Malaysia One Year From Now The Pr 1 (45.89 KiB) Viewed 55 times
Malaysian Island Resort. Theresa Nunn is planning a 30-day vacation on Pulau Penang, Malaysia, one year from now. The present charge for a luxury suite plus meals in Malaysian ringgit (RM) is RM1,041/day. The Malaysian ringgit presently trades at RM3.1350/$. She determines that the dollar cost today for a 30-day stay would be $9,961.72. The hotel informs her that any increase in its room charges will be limited to any increase in the Malaysian cost of living. Malaysian inflation is expected to be 2.7036% annum, while U.S. inflation is expected to be 1.239%. a. How many dollars might Theresa expect to need one year hence to pay for her 30-day vacation? b. By what percent will the dollar cost have gone up? Why? a. How many dollars might Theresa expect to need one year hence to pay for her 30-day vacation? The amount Theresa might expect to need one year hence to pay for her 30-day vacation is $10088.9. (Round to the nearest cent.)
Why? The dollar cost has risen by the U.S. dollar inflation rate. This is a result of Theresa's estimation of the future suite costs and the exchange rate changing in proportion to inflation (relative purchasing power parity).