Question
Hopkins Chocolate Company buys green cocoa beans that are processed into consumer products. Cocoa beans are currently selling for $2,000 United States Dollars (USD) per
Hopkins Chocolate Company buys green cocoa beans that are processed into consumer products. Cocoa beans are currently selling for $2,000 United States Dollars (USD) per metric ton. Hopkins buys 100 tons at a time from Abamo Chocolate in Ghana, Africa. Normal purchase procedures stipulate that the purchase contract is denominated in Ghanaian Cedi and payment in Cedi is due 90 days after purchase.
Recently, the treasurer of Hopkins became concerned that the U.S. Dollar would change in value against the Ghanaian Cedi. Consequently, Hopkins bought a 90-day option.
Question: Hopkins bought a 90-day option to exchange $200,000 USD for 900,000 Cedi. They paid $8,000 USD for the option and today it has been 90 days. Locate today's value of the Cedi at XE.com's Live Exchange Rates and calculate how much Hopkins won or lost by purchasing the 90-day option. Explain your calculations in detail.
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