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Please show all work: Suppose the current $/B exchange rate is $1.56/. The inflation rate...

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Accounting

Please show all work:

Suppose the current $/B exchange rate is $1.56/. The inflation rate in the U.S. is projected to be 4.6% for the year, while it is expected to be 3.2% in the U.K. Right now, a consumer can be the same car in the U.S. for $26,000 that costs 16,667 in England.

  1. What is the project cost of the car in the U.S. and U.K. by the end of the year?
  2. What change in exchange rate is projected by PPP?
  3. Demonstrate that the two cars will cost the same at the end of the year if PPP holds.

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