Intro Stela-N-Steve apparels have just submitted their bid to sell their newest fashion collection to a customer in Europe. If the bid is accepted, the order is expected to generate a cash inflow of E100,000 in one year. Management is concerned about exchange rate risk and decides to sell E100,000 forward. The spot rate is USD 1.17= EUR.1, and the 1-year forward rate is USD 1.38=EUR1. Part 1 - Attempt 1/3 for 10pts. What will be the total profit if the company gets the order and the exchange rate will be USD1.28 = EUR1 in one year (in S)? Total profit = Dollar value of cash fiow sold at forward rate =100,0001.38$ =5138,000 Part 2 - Attempt 1/3 for 10 pts. What will be the total profit if the company does not get the order and the exchange rate will be USD1.28 = EUR1 in one year (in S)? Correct CF: Cash flow E1: exchange rate in one year F: forward exchange rate Profit from forvard contract =CF(FE1)=100,000(1.38$1.28$)=$10,000 Part 3 - Attempt 2/3 for 9 pts. What will be the total profit if the company gets the order and the exchange rate will be USD1.54 = EUR1 in one year (in S)? Part 4 Attempt 1/3 for 10 pts. What will be the total profit if the company does not get the order and the exchange rate will be USD1.54 = EUR1 in one year (in S)? Correct 2