A U.S. company expects to buy merchandise from a Canadian supplier for approximately C$1,000,000, in the middle of April. On November 15, 2013, the company enters a forward contract locking in the U.S. dollar purchase price of C$1,000,000, for delivery on April 15, 2014. The forward qualifies as a hedge of the forecasted transaction. Delivery of the merchandise takes place on April 15, 2014, and the forward contract is closed and payment is made to the supplier. At what amount is the merchandise reported on delivery on April 15, 2014?
a. $895,000
b. $905,000
c. $940,000
d. $950,000

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Spot rate Forward rate for 4/15/14 delivery of Canadian dollars November 15, 2013 December 31, 2013 March 1, 2014 April 15, 2014 $0.905 0.965 0.920 0.940 $0.895 0.950 0.915 0.940