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can you please answer A,B,C,D,E Bobcat Company. Bobcat Company, U.S. based manufacturer of industrial equipmont, just purchased a Korean company that produoes plastie nuts and
can you please answer A,B,C,D,E
Bobcat Company. Bobcat Company, U.S. based manufacturer of industrial equipmont, just purchased a Korean company that produoes plastie nuts and botts for heavy equipment. The purchase. price was Won 7,800 milion. Won1, 000 milion has already been paid, and the remaining Won6, a00 milion is due in six months. The curent spot rate is Wont, 1148 , and the 6 month forward nse is Won 1.1695. The 6-month Korean won interest rate is 15% per annum, the 6 -month U.S. dollar rale is 3% per annum. Bobcat can invest at these interest rales, or borrow at 2% por arnum above Bobcat can invest at the rases given above, or borrow at 2% per annum above those rates. Bcbcar's weighled average cost of capital is 11.5%. Compare allemate ways below that Bobcat might deal With its foreign exchange exposure. a. How much in US. dolars will Bobcat pay in 6 months without a hodge if the expectod spot tate in 6 months is assumed to be Won1.114/\$? Won1,169\$? b. How much in U.S. dolars wit Bobcat pay in 6 months with a forward market hedge? c. How much in U.S. dollars will Bobcat pay in 6 moeths with a money market hedge? d. How muich in U.S. dottars wit Bobcot poy in 6 months with an option hedge if the expected spot rate in 6 months is assumed to be less than Wont, 200 ?s? to be Wont, 300 s? e. What do you recommend? a. How much in U.S. dollars will Bobcat pay in 6 month wehout a hedge it the axpected spot rate in 6 months is assumed to be Wont, 114$ ? (Round to the nearest cent.) Step by Step Solution
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