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A British firm is set to receive 15,000,000 pesos from its overseas operations in 12 months. The company decides to enter into a 12 month

A British firm is set to receive 15,000,000 pesos from its overseas operations in 12 months. The company decides to enter into a 12 month forward contract for 15 million pesos to mitigate its price risk. The forward rate is 16 pesos/pound. Find the British firm's profit/loss (in terms of pounds) on the forward contract if the spot rate is 20 pesos/pound at expiration.

-187,500

187,500

16,000,000

-16,000,000

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