earch Citations & b) Assume that you provide financial advice to JBK Limited. The company's management has come to you for guidance over a foreign exchange transaction. The company, based in New Zealand, has sold AUDS 5,200,000 worth of equipment to a customer in Australia. The payment has been deferred for nine (09) months. The following information has been provided: Spot exchange rate Nine-month forward rate New Zealand lending rate New Zealand deposit rate AUS lending rate AUS deposit rate Risk free rate in New Zealand Risk free rate in the AUS = = 19 NZD 1.1016/AUSS NZD 1.0968/AUS$ 1.24% p.a. 1.28% p.a. 1.64% p.a. 1.14% p.a. 1.72% p.a. 1.66% p.a. Required: 5.1 Assuming the Interest Rate Parity holds between the two countries, calculate the expected spot rate in months. (Round off your solution to four decimals) (4 marks) 5.2 Calculate the expected value of the sale in New Zealand dollars using the expected spot rate calculated in 5.1 above, assuming they do not hedge. Based on your result, should the company hedge? Why (2 marks) 5.3 Calculate the value of the proceeds from the sale if the company enters a forward rate agreement. (2 marks] 5.4 Assuming the company enters a forward market hedge contract, calculate the foreign exchange loss, or gain that would be recorded in the books of accounts if the transaction had been recorded in the books at the spot rate at the time of purchase. (3 marks) 5.5 Explain and calculate the net amount receivable by JBK Limited if a money market hedge is used. (Show all workings). (9 marks) (2 marks) 5.6 Based on your calculations above, which alternative would you recommend and why? Page 9 of 15