Freddy Flymaster ( Exchange Rate, changes in Qd and revenues)

Your old friend, Sir Freddy Flyermaster, is a pioneer. His company, U.K. based FlyerMaster Airlines is one of the original value flights offering a low-cost alternative to the more established airlines. At the time he founded the company, the British sterling pound was strong and the U.S. dollar was weak, which provided FlyerMaster with an opportunity. His primary strategy was compete against British Airways by offering low-cost transatlantic packages to London vacation travelers to the U.S.A. As consumer demand soared and FlyerMaster´s business began to propel, Freddy negotiated a deal to buy more airplanes with the Boeing company. He agreed on a price set in U.S. dollars.


Recognizing his own tendency to be impulsive, Freddy decides to consult you, his trusted friend and expert in international business, just before signing and finalizing the Boeing deal. Assume there are only 2 possible scenarios for this investment (to buy or not to buy as stipulated). Analyze the two scenarios and give your final recommedation to Freddy.