2/11/2020 Part II. (35 points) Amazing Corporation, a U.S. enterprise, sold product to a customer in Wales on October 1, 20x1 for 100,000 with payment required on April 1, 20x2. Relevant exchange rates are: Spot rate Forward rate (to 4/1/x2) October 1, 20x1 $1.87 $1.85 December 31, 20x1 1.86 $1.84 April 1, 20x2 1.90 The discount factor corresponding to the company's incremental borrowing rate for 3 months is 0.74. Amazing Corporation enters a forward contract on October 1, 20x1 to sell 100,000 six months hence, on April 1, 20x2. Required: a. How much is the fair value of the forward contract on December 31, 20X1. b. Assume that Amazing Corporation designated the forward contract as a fair value hedge, what would be the impact on net oncome in 20x1 and 20x2? c. Assume that Amazing Corporation designated the forward contract as a cash flow hedge, what would be the impact on net oncome in 20xl and 20x2? (The straight-line method is used to amortize the discount on the forward contract). 2/11/2020 Part II. (35 points) Amazing Corporation, a U.S. enterprise, sold product to a customer in Wales on October 1, 20x1 for 100,000 with payment required on April 1, 20x2. Relevant exchange rates are: Spot rate Forward rate (to 4/1/x2) October 1, 20x1 $1.87 $1.85 December 31, 20x1 1.86 $1.84 April 1, 20x2 1.90 The discount factor corresponding to the company's incremental borrowing rate for 3 months is 0.74. Amazing Corporation enters a forward contract on October 1, 20x1 to sell 100,000 six months hence, on April 1, 20x2. Required: a. How much is the fair value of the forward contract on December 31, 20X1. b. Assume that Amazing Corporation designated the forward contract as a fair value hedge, what would be the impact on net oncome in 20x1 and 20x2? c. Assume that Amazing Corporation designated the forward contract as a cash flow hedge, what would be the impact on net oncome in 20xl and 20x2? (The straight-line method is used to amortize the discount on the forward contract)