Question
An importer located in Romania needs to make a payment in 1 years time of 681,360 Euro for a shipment of cars parts to Romaina.
An importer located in Romania needs to make a payment in 1 years time of 681,360 Euro for a shipment of cars parts to Romaina. Unfortunately, there is no foreign exchange option for Euro-Leu exchange and the importer cannot readily find someone to take the other side of a forward contact. The importer observes that The Euro is currently trading at $1.04 US dollars. The Romanian Leu is trading at $.020 US dollars. A bank in Romania posts an annual interest rate of 16% on all deposits and loans. A bank in Germany posts an annual interest rate of 2% on all deposits and loans. Using the two banks and the current spot rates, the importer is assured of paying ___ Leu for her imports?
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