Covington Industries just sold equipment to a Mexican firm. Payment of 11,315,000 pesos will be due to
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Covington Industries just sold equipment to a Mexican firm. Payment of 11,315,000 pesos will be due to Covington in 30 days. Covington has the option of selling the pesos at a 30-day forward rate of $0.09139/peso. If it waits 30 days to sell the pesos, the expected spot rate is $0.0907/peso. In dollars, how much better off is Covington by selling the pesos in the forward market?
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Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
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