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A US firm imports parts from Mexico for MXN 7,727,563 with payment due to the Mexican firm in one year. The market condition is summarized
A US firm imports parts from Mexico for MXN 7,727,563 with payment due to the Mexican firm in one year. The market condition is summarized as follows:
Interest rate, US: 2.04% per annum
Interest rate Mexico: 5.29% per annum
The spot exchange rate: $0.053/MXN
The one-year forward rate: $0.060/MXN
The US firm is considering a money market hedge. What is the cost in one year to the firm if it uses a money market hedge? Round your final answer to the nearest dollar.
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