Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Arvin Australian Imports has agreed to purchase 15,000 cases of Australian wine for 3 million Australian dollars at today's spot rate. The firm's financial manager,
Arvin Australian Imports has agreed to purchase 15,000 cases of Australian wine for 3 million Australian dollars at today's spot rate. The firm's financial manager, Sarah Vintnor, has noted the following current spot and forward rates: U.S. Dollar/ Australian Dollar/ Australian Dollar U.S. Dollar Spot 0.7223 1.3845 30-day forward 0.7228 1.3835 90-day forward 0.7237 1.3818 180-day forward 0.7255 1.3784 On the same day, Vintnor agrees to purchase 15,000 more cases of wine in 3 months at the same price of 3 million Australian dollars. a. What is the price of the wine in U.S. dollars if it is purchased at today's spot rate? Round your answer to the nearest cent. $ b. What is the cost in U.S. dollars of the second 15,000 cases if payment is made in 90 days and the spot rate at that time equals today's 90-day forward rate? Round your answer to the nearest cent. $ c. If the exchange rate for the Australian dollar is 1.31 to $1 in 90 days, how much will Vintnor have to pay for the wine (in U.S. dollars)? Round your answer to the nearest cent. $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started