Question

Vixor Co. is a U.S. firm conducting a financial plan for the next year. It has...

Vixor Co. is a U.S. firm conducting a financial plan for the next year. It has no foreign subsidiaries, but more than half of its sales are from exports. Its foreign cash inflows to be received from exporting and cash outflows to be paid for imported supplies over the next year are shown in the following table:

Currency

Total Inflow

Total Outflow

Candian Dollar (C$

C$40,000,000

C$10,000,000

New Zealand Dollar (NZ$)

NZ$5,000,000

NZ$1,000,000

Mexican Peso (MXP)

MXP11,000,000

MXP5,000,000

Singapore Dollar (S$)

S$4,000,000

S$8,000,000

The spot rates and one-year forward rates as of today are shown below:

Currency

Spot Rate

One-Year Forward Rate

C$

$.70

$.73

NZ$

$ .60

$.59

MXP

$.04

$.03

S$

$.69

$.68


  1. Based on the information provided, determine Vixor’s net exposure to each foreign currency in dollars.

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Answer #1

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