Question
Car Corp. (a U.S. based company) sold parts to a Korean customer on December 16, 2018, with payment of 10milion Korean won to be received
Car Corp. (a U.S. based company) sold parts to a Korean customer on December 16, 2018, with payment of 10milion Korean won to be received on January 15, 2019. The following exchange rates applied: Date Spot Rate Forward Rate to Jan. 15 Dec. 16, 2018 $0.00092 $0.00098 Dec. 31, 2018 $0.00090 $0.00093 Jan. 15, 2019 $0.00095 $0.00095 Assuming a forward contract was entered into on December 16, what would be the net impact on Car Corp.s 2018 income statement related to this transaction? Assume an annual interest rate of 12% and a fair value hedge. The present value for one half month at 12% is 0.9950
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started