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Elan Pharmaceuticals. Elan Pharmaceuticals, a U.S.-based multinational pharmaceutical company, is evaluating an export sale of its cholesterol-reduction drug with a prospective Indonesian distributor. The purchase

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Elan Pharmaceuticals. Elan Pharmaceuticals, a U.S.-based multinational pharmaceutical company, is evaluating an export sale of its cholesterol-reduction drug with a prospective Indonesian distributor. The purchase would be for 1,610 million Indonesian ruplah ( Rp), which at the current spot exchange rate of Rp9,420/S, translates into $170,912.95. Although not a big sale by company standards, company policy dictates that sales must be settled for at least a minimum gross margin, in this case, a cash settlement of $164,000. The current 90 -day forward rate is Rp9,900/\$. Although this rate appeared unattractive, Elan had to contact several major banks before even finding a forward quote on the rupiah. The consensus of currency forecasters at the moment, however, is that the rupiah will. continue to strengthen, possibly rising to Rp10,230/\$ over the coming 90 to 120 days. Analyze the prospective sale an export sale of its cholesterol-reduction drug with a prospective Indonesian distributor. The purchase would be ror 1,610 million Indonesian ruplah (Rp), which at the current spot exchange rate of Rp9,420/\$, translates into $170,912.95. Although not a big sale by company standards, company policy dictates that sales must be settled for at least a minimum gross margin, in this case, a cash settlement of $164,000. The current 90 -day forward rate is Rp9,900/\$. Although this rate appeared unattractive, Elan had to contact several major banks before even finding a forward quote on the rupiah. The consensus of currency forecasters at the moment, however, is that the rupiah will continue to strengthen, possibly rising to Rp 10,230/$ over the coming 90 to 120 days. Analyze the prospective sale and make a hedging recommendation. How much in U.S. dollars will Elan recelve in 90 days without a hedge if the expected spot rate in 90 days is assumed to be Rp9,420/\$? (Round to the nearest cent.)

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