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Question 21.ss.1: If a Volkswagen Passat costs $26,350 in Baltimore and €21,67...

If a Volkswagen Passat costs $26,350 in Baltimore and €21,675 in Frankfurt, what is the implied exchange rate between the U.S. dollar and the euro?

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\begin{matrix} \text{Cost of the car in Baltimore} &=& \$26,350 \\ \text{Cost of the car in Frankfurt} &=& €21,675 \\ \text{Dollar to euro exchange rate} &=&\frac{\$26,350}{€21,675}=\$1.2157/€ \end{matrix}

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