53 Long-term forward contracts Assume that interest rate parity exists. The annualised interest rate is presently 5 per cent in Australia for any term to maturity and is 13 per cent in India for any term to maturity. Dokar Co. (an Australian company) has an agreement in which it will develop and export software to India’s government two years from now and will receive 20 million Indian rupees in two years. The spot rate of the rupee is A$0.0195. Dokar uses a two-year forward contract to hedge its receivables in two years.

How many Australian dollars will Dokar Co. receive in two years? Show your work.