Groton Corporation is located in the U.S. and sells products to a company in Croatia for 9,500,000 Croatian Peso. Payment from the Croatian company is to be received in 60 days. The current spot rate is 1 Croatian Peso = $0.1567. Groton expects that the U.S. Dollar will appreciate against the Croatian Peso. To hedge against the possible appreciation of the U.S. Dollar, Groton signs a contract with CCC Global Bank to sell Croatian Peso forward in 60 days at a rate of 1 Croatian Peso = $0.1525.

a) Compute the current value of Accounts Receivable to Groton Corp.?

b) How much will Groton collect when they sell the Croatian Peso forward in 60 days?

c) Assume that in 60 days, the spot rate is 1 Croatian Peso= $0.1591. Did it make sense for Groton to hedge the receivable? Explain.