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Bobcat Inc. a US-based manufacturer of heavy industrial equipment just purchased components for its manufacturing process for A$1,000,000 from a company in Australia. According to

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Bobcat Inc. a US-based manufacturer of heavy industrial equipment just purchased components for its manufacturing process for A$1,000,000 from a company in Australia. According to the terms of sale, Bobcat is allowed to make a payment in 180 days. You need to help Bobcat Inc. to explore different ways of hedging its accounts payable by using information below and make a decision. Table #2 Current spot rate A$1.2511/$ 3-month forward rate A$1.2564/$ 6-month forward rate A$1.2603/$ 12-month forward rate A$1.2782/$ 180-day Investing rate in USA 3% 180-day borrowing rate in USA 4% 180-day investing rate in Australia 2% 180-day borrowing rate in Australia 3% Bobcat's WACC 10% Premium PUT option 3% Premium CALL option 1% CALL and PUT options strike price A$1.3064/$ Forward hedge (1) Calculate the total payment in USD, if Bobcat hedges the contract using forward market hedge. Round your answer to the nearest dollar. Question 12 1 pts Use data from Table #2 Money market hedge (1) Find the amount you need to borrow or invest today in Australian Dollars (A$). Round your answer to the nearest dollar. + py Questi Use data from Table #2 Money market hedge (2) How much USD will the company need to pay today to obtain the needed amount of Australian Dollars. Round your answer to the nearest dollar. Question 14 1 pts Use data from Table #2 Money market hedge (3) Carry the amount of USD from the previous question forward 180 days, Round your answer to the nearest dollar. Use data from Table #2 Option hedge (1) What option should you buy to hedge Bobcat's transaction exposure in the option market? Call O Put Question 16 1 pts Use data from Table #2 Option hedge (2) Calculate the option's premium in USD today. Round your answer to the nearest dollar. Use data from Table #2 Option hedge (3) Carry the option's premium 180 days forward. Round your answer to the nearest dollar. Question 18 1 pts Use data from Table #2 Option hedge (4) If Bobcat exercises the option at the strike price, how much will Bobcat pay in USD in 180 days? (Do not account for the option's premium). Round your answer to the nearest dollar. Use data from Table #2 Option hedge (5) Find the total cost of the option hedge to Bobcat in USD, if the management choose to hedge on the option market and the option is exercised? (Hint: include option premium). Round your answer to the nearest dollar

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