Information about the Case Report

Case: Acpana Business Systems Inc.: Effect of Currency Exposure on Revenue

Due date: This report is due at the beginning of the class on July 19, 2018.

Your case report MUST be typed, and must be handed in as a paper copy in class. Hand-written reports are not accepted.

Feel free to make assumptions; justify your assumptions.

You report should include the following analysis:

Frame the issue. Why is Brenzel Concerned by the current exchange rate fluctuation?

Which vehicles does Acpana have at its disposal for hedging? Assume Acpana will need to transfer $200,000 US dollars to Canadian dollars on a regular basis, calculate the impact of these different hedging strategies against a naked position at:

1 Cdn$=1 US$;

1 Cdn$=0.90 US$;

1 Cdn$=1.10 US$.

Should Schenkel recommend Acpana hedge its position in Canadian dollars? Why or why not? If you think he should recommend a hedge, which vehicle should he recommend?

Does the Economist Business Units forecast that the Canadian dollar will finish the year at parity to the US dollar affect your decision to hedge?

Summarize your conclusions