A London merchant contracts:

$($a$)$ to buy $200$ tons of chemicals in two equal shipments at EUR $479$ per ton from Germanys on terms which require an immediate payment of $50\%$ and the balance on $1$ August

$($b$)$ to sell at SGD$900$ per ton both shipments to a Singaporean buyer who agrees to pay during August when the goods are expected to arrive in Oslo.

On $1$ July the merchant asks his bank to make an initial payment and to cover him forward for the other transactions.

The second transfer to Germany is subsequently made and a payment received from Oslo following the arrival of the first shipment on $6$ August. However, a fire partially destroys the chemical plant and the second shipment cannot be made. Its purchase price is refunded in full to the merchant who,

sells it to his bank on $1$ September at the same time closing out the balance of the forward contract.

$($i$)$ The contract is awarded to your customer, Astra Plc$,$ and is signed in March.

$($ii$)$ Cash $N$ Carry has to cover his Euro receivables as per the following expected dates:

EUR $500000$ during the month of April

EUR $500000$ during the month of May

EUR $500000$ on $1^{st}$ July.

$($iii On $1$ April, your customer asks you to establish forward $)$ contracts for each of its potential currency receipts.

$($iv The first shipment takes place on $6$ April, when payment is claimed $)$ and made.

$($v$)$ The second shipment takes place on $12$ May and eventually payment is effected.

$($vi However, on $1$ June, you receive a further telex from the issuing $)$ bank, requesting you to amend the letter of credit as follows:

The third shipment and payment to be effected sometime in August. Your customer agrees to these amendments, provided the forward contract in respect of the third shipment can be amended.

The forward contract hence has to be extended.

The rates of exchange for GBP$/$EUR are:

$\backslash$table$[[1$ April,$],[$SPOT$,1\mathrm{.}5003,1\mathrm{.}7505],[1$ month,$0\mathrm{.}85cpm,0\mathrm{.}70cpm$