Slade plc is a medium-sized UK company with export and import trade links with US companies. The
Question:
Required
Calculate the net sterling receipts which Slade might expect for both its three and six month transactions if it hedges foreign exchange risk on:
(a) The forward foreign exchange market;
(b) The money market.
Transcribed Image Text:
Purchase of components, cash payment due in 3 months: Sale of finished $116,000 $197,000 $447,000 goods, cash receipt due in 3 months: Purchase of finished goods for resale, h payment due in 6 month cas s: Sale of finished goods, Exchange rates quoted on London market Spot 3 months' forward 6 months' forward cash receipt due in 6 months: $154,000 $/E 1.4106-1.4140 0.82-0.77 1.39-1.34 Interest rates (annual) 3 months or 6 months Sterling Dollars Borrowing Lending 7.5% 60% 4.5% 3.0%
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 72% (11 reviews)
Outright exchange rates are Spot 1410614140 3 months forward 1402414063 6 months forward 1396714006 ...View the full answer
Answered By
Amar Kumar Behera
I am an expert in science and technology. I provide dedicated guidance and help in understanding key concepts in various fields such as mechanical engineering, industrial engineering, electronics, computer science, physics and maths. I will help you clarify your doubts and explain ideas and concepts that are otherwise difficult to follow. I also provide proof reading services. I hold a number of degrees in engineering from top 10 universities of the US and Europe.
My experience spans 20 years in academia and industry. I have worked for top blue chip companies.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Corporate Finance and Investment decisions and strategies
ISBN: 978-1292064062
8th edition
Authors: Richard Pike, Bill Neale, Philip Linsley
Question Posted:
Students also viewed these Corporate Finance questions
-
Goran plc is a UK company with export and import trade with the USA. The following transactions, in the currency specified, are due within the next six months: Purchases of goods, cash payment due in...
-
Lyons plc is a medium-sized manufacturer of paperboard containers and boxes. The company sponsors a non-contributory, defined benefit pension plan that covers its 250 employees. Tim Shea has recently...
-
Telford Industrial Services plc is a medium-sized business. Extracts from the businesss financial statements appear below. Required: Prepare a set of common-sized statements of financial position and...
-
Refer to Figure 9.3. Svetlana scores 0.70 on the responsibility scale of the CPI. Dymitri scores 0.30 on the responsibility scale of the CPI. By how many T-score points do their scores differ? Figure...
-
Employing the same methods as used to analyze Figure. Determine the forces and reactions for the truss shown inFigure. 500 45 250 30 30
-
A sound wave is traveling in warm air when it hits a layer of cold, dense air. If the sound wave hits the cold air interface at an angle of 25o, what is the angle of refraction? Assume that the cold...
-
In 2020, Explorers Inc. completed installment sales of \(\$ 80,000\), recorded in full as accounts receivable and as revenue. For tax purposes, it recognizes income when cash is received. Cash...
-
The annual report is considered by some to be the single most important printed document that companies produce. In recent years, annual reports have become large documents. They now include such...
-
please help. Suppose that Intel has entered into a currency swap in which it receives 4% per annum in British pounds and pays 3% per annum in dollars once a year. The principals of the two currencies...
-
To keep track of office furniture, computers, printers, and so on, the FOUNDIT Company uses the table structure shown in Table P6.5. a. Given that information, write the relational schema and draw...
-
Europa plc is a UK-based import-export company. It is now 15 May and the following transaction has been agreed: The sale of pine furniture worth $1,250,000 to the USA receivable on 15 August. $/ FX...
-
Kay plc a UK-based chemical firm but with plants in Germany and the Netherlands, manufactures man-made fibres. It would like to expand its exports to Latin America and the country of Copacabana, in...
-
A parallel-plate capacitor has circular plates of radius \(R=15 \mathrm{~cm}\) and plate separation distance \(d=1 \mathrm{~mm}\). While it is charging, the potential difference across the plates is...
-
Te If you have $90,000 in a bank account that is paying an interest rate of 6 percent that is being compounded annually, how many years will it take to double your investment if the interest rate...
-
What role does career development and opportunities for skill enhancement play in promoting long-term job satisfaction and employee retention, and how can organizations effectively invest in employee...
-
Nick went out for dinner with a few friends. The restaurant bill should have been $175, but instead, the waitress brings the bill for $160. Find the absolute error and relative percentage error for...
-
What do you need to do if you want to control the DNS records for notyetregistered.com
-
Indicate how you would evalutate f (-7), f (-3) and f (5) for the piecewise function: f(x): = {z + 3 3 for x-3 (first function) for > -3 (second function)
-
RAID systems typically allow you to replace failed disks without stopping access to the system. Thus, the data in the failed disk must be rebuilt and written to the replacement disk while the system...
-
Write an SQL statement to display all data on products having a QuantityOnHand greater than 0.
-
Rogot Instruments makes fine violins, violas, and cellos. It has $1 million in debt outstanding, equity valued at $2 million, and pays corporate income tax at a rate of 35%. Its cost of equity is 12%...
-
Rumolt Motors has 30 million shares outstanding with a price of $15 per share. In addition, Rumolt has issued bonds with a total current market value of $150 million. Suppose Rumolts equity cost of...
-
Summit Builders has a market debt-equity ratio of 0.65 and a corporate tax rate of 40%, and it pays 7% interest on its debt. By what amount does the interest tax shield from its debt lower Summits...
-
In a market value balance sheet, the liabilities and equity are measured in terms of their market value, but the assets are measured by their historical costs as required by generally accepted...
-
In chapter 23, although there were many mistakes and broken systems with Socit Gnrale, what was the first breakdown of managerial responsibilities? Question 25 options: A) The chief risk manager...
-
Uncertainty in income tax expenses results from Multiple choice question. not filing tax returns until uncertainties are resolved. waiting for the IRS to complete the tax return. management taking a...
Study smarter with the SolutionInn App