2 A A Aav AEE ADA Et Aa Bbcode 0 Aabcode AaBbccdc No Spacing Heading Normal Proctor and Gamble (P&G) is one of the top ten major U.S. exporters. This month, P&G delivers a large shipment of household and personal care items to a major distributor in Austria (a country that uses the euro). The accounts receivable, 30 million, is due in 90 days, standard terms for the consumer products industry in Europe. P&G's treasury team has collected the following currency and market quotes. The company's foreign exchange advisors believe the euro will be at about $1.4200/ in 90 days. Assume that P&G's management does not use currency options in currency risk management activities. Curront spot rates ($/) = $1.4158 Credit Suisse 90-day forward rate (S/E) = 1.4172 P&G's WACC ($) = 9.600% 90-day euro-dollar interest rate 4.000% per annum 90-day euro interest rate 3.885% per annum 90-day eurodollar borrowing rate = 5.000% per annum 99 day euro borrowing rate=5.000% per annum 1. What would the result be if P&G chose to remain unhedged? Show how you arrived at your answer with numbers under three different scenarios for the future spot rate: same as current spot rate; what P&G's foreign exchange advisors believe what the Credit Suisse forward rate says Are these results certain or risky? 2.What would the result be if P&G chose to pursue a forward market hedge with Credit Suisse? Show how you arrived at your answer with numbers. Is this result cortain or risky, why? 3. What would the result be f P&G chose to pursue a money market hedge? Show how you arrived at your answer with numbers. Is this result certain or risky. why