A bottle of Dom Perignon is selling for 550FF in Paris and the exchange rate is $0.167/FF. The champagne is selling for $95 on average in the U.S. exclusive of transportation cost. The price in the U.S. is:

Question

Quizplus · Accepted Answer

To find the U.S. dollar equivalent of the price in Paris, multiply the price in FF by the exchange rate: 550FF * $0.167/FF = $91.85. Since the U.S. price is $95, it is $3.15 more than the converted price, making it overvalued.

A Bottle of Dom Perignon Is Selling for 550FF in Paris