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Assume that Calumet Co . will receive 5 million pesos in 1 5 months. It does not have a relationship with a bank at this
Assume that Calumet Co will receive million pesos in months. It does not have a relationship with a bank at this time and, therefore, cannot obtain a forward contract to hedge its receivables at this time. However, in three months, it will be able to obtain a oneyear month forward contract to hedge its receivables. Today the threemonth US interest rate is percent not annualized the month US interest rate is percent, the threemonth Mexican peso interest rate is percent not annualized and the month peso interest rate is percent.
Assume that interest rate parity exists. Assume the international Fisher effect exists. Assume that the existing interest rates are expected to remain constant over time. The spot rate of the Mexican peso today is $ Based on this information, estimate the amount of dollars that Calumet Co will receive in months. Do not round intermediate calculations. Round your answer to the nearest dollar.
$
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