Car ID Inc. is a U.S.-based distributor of auto supplies for several domestic and foreign car companies. On November 1, Year 1, Car ID sold and shipped auto parts to a customer in Switzerland for a price of 500,000 Swiss francs (CHF). Payment is to be received on January 30, Year 2. On the date of sale, Car ID also entered into a three-month forward contract to sell CHF 500,000. The forward contract is properly designated as acash flow hedge of a foreign currency receivable. Car ID's incremental borrowing rate is 12%. The present value factor for one month at an incremental borrowing rate of 12% is .99010. Relevant exchange rates are as follows:

Spot Forward Rate Date Rate (to January 30, Year 2) November 1, Year 1. . . . $0.500 $0.495 December 31, Year 1. . . . 0.520 0.516 January 30, Year 2. . . . . . p.490 0.490Spot Forward Date Rate Rate (to April 30, Year 2) November 1, Year 1. . . . $0.1200 $0.1202 December 31, Year 1. . . . 0.1300 0.1301 April 30, Year 2. . . . . .. 0.1350 0.1350