1. A U.S. company has an account receivable of 10,000,000 from a German company to be paid in three months. The three-month forward rate for the euro is $0.50 per euro.

a. How much is the approximate value of the account receivable in U.S. dollars, if the company makes a forward hedge.

b. If in three months the spot rate for the euro has changed to $0.65 per euro, in retrospect was it advantageous for the U.S. company to go into the forward hedge? Why or why not? Support your answer.