Business, 11.08.2021 17:50, Gigglygoose3159

Plains States Manufacturing has just signed a contract to sell agricultural equipment to Boschin, a German firm, for â‚¬1,250,000. The sale was made in June with payment due six months later in December. Because this is a sizable contract for the firm and because the contract is in Euros rather than dollars, Plains States is considering several hedging alternatives to reduce the exchange rate risk arising from the sale. To help the firm make a hedging decision you have gathered the following information. The spot exchange rate is $.8924/â‚¬ The six month forward rate is $.8750/â‚¬ Plains Statesâ€™ cost of capital is 11% The Euro zone 6-month borrowing rate is 9% (or 4.5% for 6 months) The Euro zone 6-month lending rate is 7% (or 3.5% for 6 months) The U. S. 6-month borrowing rate is 8% (or 4% for 6 months) The U. S. 6-month lending rate is 6% (or 3% for 6 months) December put options for â‚¬625,000; strike price $.90, premium price is 1.5% (of spot exchange rate; that is, the premium is 1.5% of spot rate per Euro) Plains Statesâ€™ forecast for 6-month spot rates is $.91/â‚¬ The budget rate, or the lowest acceptable sales price for this project, is $1,075,000 or $.86/â‚¬ a. If Plains States chooses not to hedge their euro receivable, the amount they receive in six months will be . A. $1,125,000 B. $1,137,500 C. $1,115,500 D. undeterminable today
b. If Plains States chooses to hedge its transaction exposure in the forward market, it will â‚¬1,250,000 forward at a rate of .

Answers: 2

Show answers

Other questions on the subject: Business

Business, 22.06.2019 08:30, rajenkins79

Kiona co. set up a petty cash fund for payments of small amounts. the following transactions involving the petty cash fund occurred in may (the last month of the company's fiscal year). may 1 prepared a company check for $350 to establish the petty cash fund. 15 prepared a company check to replenish the fund for the following expenditures made since may 1. a. paid $109.20 for janitorial services. b. paid $89.15 for miscellaneous expenses. c. paid postage expenses of $60.90. d. paid $80.01 to the county gazette (the local newspaper) for an advertisement. e. counted $26.84 remaining in the petty cashbox. 16 prepared a company check for $200 to increase the fund to $550. 31 the petty cashier reports that $380.27 cash remains in the fund. a company check is drawn to replenish the fund for the following expenditures made since may 15. f. paid postage expenses of $59.10. g. reimbursed the office manager for business mileage, $47.05. h. paid $48.58 to deliver merchandise to a customer, terms fob destination. 31 the company decides that the may 16 increase in the fund was too large. it reduces the fund by $50, leaving a total of $500.

Answers: 1

continue

Business, 22.06.2019 22:00, emilyswinge4421

Exercise 2-12 cost behavior; high-low method [lo2-3, lo2-4] speedy parcel service operates a fleet of delivery trucks in a large metropolitan area. a careful study by the company’s cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is 11.6 cents per mile. if a truck is driven only 80,000 miles during a year, the average operating cost increases to 13.6 cents per mile. required: 1.& 2. using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (round the "variable cost per mile" to 3 decimal places.)

Answers: 3

continue

Business, 23.06.2019 03:00, dontcareanyonemo

Madeline quits her job, at which she was earning $20,000 per year. she then takes $50,000 out of savings, on which she was earning 10% interest, and uses it to buy supplies for her business. she also pays $10,000 in rent on the building and $15,000 in additional labor costs. in her first year of operations, madeline receives $150,000 in revenue from sales. instructions: round each answer to a whole number. madeline's accounting cost is

Answers: 1

continue

Business, 23.06.2019 10:30, mommykathryn10pb9bdb

Denise is a hard worker, but she has always had differences with her boss, angela. angela has recently become more demanding and is often unwilling to provide clarification on project requirements. after too many long working days with little or no job satisfaction, denise walked into angela's office and submitted her resignation. denise knows that her résumé is strong and feels confident she will find another job. denise is now facing unemployment. a. seasonalb. cyclicalc. structurald. frictional

Answers: 3

continue

Do you know the correct answer?

Plains States Manufacturing has just signed a contract to sell agricultural equipment to Boschin, a...