Brandlin Company of Anaheim, California, sells parts to a foreign customer on December 1, 2017, with payment of 30,000 korunas to be received on March 1, 2018. Brandlin enters into a forward contract on December 1, 2017, to sell 30,000 korunas on March 1, 2018. Relevant exchange rates for the koruna on various dates are as follows: Forward Rate Spot Rate (to March 1, 2018) Date December 1, 2017 December 31, 2017 March 1, 2018 $4.80 4.9e 5.05 $4.875 5.990 N/A Brandlin's incremental borrowing rate is 15 percent. The present value factor for two months at an annual interest rate of 15 percent (1.25 percent per month) is 0.9755. Brandlin must close its books and prepare financial statements at December 31