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4is similar to Transactign Exposure slides 62 63;detailed calculation? are giv 47? Assume that Calumet Co. will receive 20 million pesos in 18 months. It

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4is similar to Transactign Exposure slides 62 63;detailed calculation? are giv 47? Assume that Calumet Co. will receive 20 million pesos in 18 months. It does not have a 0 relationship with a bank at this time, and theretore can not obtain a forward contract to hedge its receivables at this time. However, in six months, it will be able to obtain a one- 0 (12-month) forward contract to hedge its receivables. Today the six-month U.S ngrest rate is 2% (not annualized), the 12-month US, interest rate is 8%, the six-month 1.2 Trie ican peso interest rate is 5% (not e Arate of the Mexican peso today is $.10, Based on this information, estimate the amount of 10%-u$1,942,800.-(out-4 re $1,136,667. annualized), and the 12-month peso interest rate is 20% Assume that interest rate parity exists. Assume the international Fisher effect exists Assume that the existing interest rates are expected to remain constant over time. The spot dollars that Calumet Co. will receive in 18 months. b $1,748,250

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