Calculate and fill in the value of the following table. United States Dollar (USD) & Brazilian Real (BRL). Please show work:

	Reals recieved	Reals to Borrow	Exchnage Rate	Convert to US$	Present Value in US$ (E)
Forward Market Hedge	163,622	?	? (B)	?	?
Money Market Hedge	163,622	? (A)	.4368 (C)	?	?
Unhedged transaction	163,622	?	.4234 (D)	?	?

NOTES

(A) In the money market method, please minus the interest due for three months to get the borrowing amount. Use the 3 month effect interest rate of REALS

(B) Forward rate is provided by the bank

(C) Use current bid rate beacause we are buying REALS (money market) today

(D) Expected bid rate 3 months out when REALS will be exchanged.

(E) The forward and ungedged transactions take place three months from now. Compute PV based on the 2.15% three month borrowin grate of a dollar. The money market hedge takes place today so no need to compute a PV.

Exchange Rates for the REAL as of June 5, 2006 (USD/BRL)

Bid on real: .4368

Ask for real: .4371

Consensus forecast bid for September 5, 2006: .4234

Consensus forecast ask for September 5, 2006: .4239

Standard deviation of monthly exchange rate changes

2005: 3.36%

Year to date 2006: 6.53%

Bank rates (annual effective rates)

Brazil: 19.47%

United States: 5.08%