Malaysian Island Resort. Theresa Nunn is planning a 30-day vacation on Pulau Penang, Malaysia, one...
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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 1,044/day. The Malaysian ringgit presently trades at RM3.1350/$. She determines that the dollar cost today for a 30-day stay would be $9,990.43. 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 2.7625% annum, while U.S. inflation is expected to be 1.293%.
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?
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