Question

XYZ company in U.S. has an account payable (A/P) in the amount of ¥8,000,000 due in...

XYZ company in U.S. has an account payable (A/P) in the amount of ¥8,000,000 due in 180 days. Given the information below, if XYZ adopts the covered forward hedge, how much fund in dollar does it need to secure now to take care of the A/P in 180 days?
- Spot rate (¥/$) = 120.00
- 180 day forward rate (¥/$) = 117.50
- $ investment/lending rate = 9.00%
- $ borrowing rate = 10.00%
- ¥ investment/lending rate = 5.00%
- ¥ borrowing rate = 6.00%

answers:

64,535.65

65,153.21

66,424.49

62,463.40

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