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A Honda Accord is priced at $18,365 in the U.S. and it is priced at £11,478,...

A Honda Accord is priced at $18,365 in the U.S. and it is priced at £11,478, then the spot rate for British pound according to PPP principle is.

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Answer #1

According to PPP principle goods have same cost anywhere in the world, otherwise arbitrage will arise. Based on this

£11,478 =  $18,365

£1 =  $18,365 /11478

= 1.60001742464

then the spot rate comes to $1.6/£

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