Answer Parts A, B, C, D, and E, please, ALL THE INFORMATION IS PROVIDED TO ANSWER THE QUESTION
P&G India. Procter and Gamble's affiliate in India, P&G India, procures much of its toiletries product line from a Japanese company. Because of the shortage of working capital in India, payment terms by Indian importers are typically 180 days or longer. P&G India wishes to hedge an 8.3 million Japanese yen payable. Although options are not available on the Indian rupee (RS), forward rates are available against the yen. Additionally, a common practice in India is for companies like P&G India to work with a currency agent who will, in this case, lock in the current spot exchange rate in exchange for a 5.26% fee. Using the exchange rate and interest rate data in the popup window, , compare alternate ways below that P&G India might deal with its foreign exchange exposure. Assume a 360-day financial year. a. How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.48114/Rs? 2.4442/Rs? 2.5696/RS? b. How much in Indian rupees will P&G India pay in 180 days with a forward market hedge? c. How much in Indian rupees will P&G India pay in 180 days with a money market hedge? d. How much in Indian rupees will P&G India pay in 180 days with a currency agent hedge? e. What do you recommend? ... a. How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.48114/RS? RS (Round to the nearest whole number.) Help me solve this View an example Get more help - Clear all Check answer - Data table Spot rate 2.48114/RS 180-day forward rate 2.4442/RS Expected spot, 180 days 2.5696/RS 180-day Indian rupee investing rate 8.36% 180-day Japanese yen investing rate 2.05% Currency agent's exchange rate fee 5.26% P&G India's cost of capital 11.49% Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet Print Done P&G India. Procter and Gamble's affiliate in India, P&G India, procures much of its toiletries product line from a Japanese company. Because of the shortage of working capital in India, payment terms by Indian importers are typically 180 days or longer. P&G India wishes to hedge an 8.3 million Japanese yen payable. Although options are not available on the Indian rupee (RS), forward rates are available against the yen. Additionally, a common practice in India is for companies like P&G India to work with a currency agent who will, in this case, lock in the current spot exchange rate in exchange for a 5.26% fee. Using the exchange rate and interest rate data in the popup window, , compare alternate ways below that P&G India might deal with its foreign exchange exposure. Assume a 360-day financial year. a. How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.48114/Rs? 2.4442/Rs? 2.5696/RS? b. How much in Indian rupees will P&G India pay in 180 days with a forward market hedge? c. How much in Indian rupees will P&G India pay in 180 days with a money market hedge? d. How much in Indian rupees will P&G India pay in 180 days with a currency agent hedge? e. What do you recommend? ... a. How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.48114/RS? RS (Round to the nearest whole number.) Help me solve this View an example Get more help - Clear all Check answer - Data table Spot rate 2.48114/RS 180-day forward rate 2.4442/RS Expected spot, 180 days 2.5696/RS 180-day Indian rupee investing rate 8.36% 180-day Japanese yen investing rate 2.05% Currency agent's exchange rate fee 5.26% P&G India's cost of capital 11.49% Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet Print Done
