Krystal is a U.S.-based company that manufactures, sells, and installs water purification equipment. On April 11, the company sold a system to the City of Nagasaki, Japan, for installation in Nagasaki's famous Glover Gardens (where Puccini's Madame Butterfly waited for the return of Lt. Pinkerton). The sale was priced in yen at 28,000,000, with payment due in three months. The exchange rate and interest rate data are shown in the popup window: Note that the interest rate differentials vary slightly from the forward discounts on the yen because of time differences for the quotes. The spot 118.215/$,for example, is a mid-point range. On April 11, the spot yen traded in London from 119.182/$ to 117.248/$.

Krystal's Japanese competitors are currently borrowing yen from Japanese banks at a spread of two percentage points above the Japanese money rate. Krystal's weighted average cost of capital is 16%, and the company wishes to protect the dollar value of this receivable.3-month options are available from Kyushu Bank: call option on 28,000,000 at exercise price of 118.000/$: a 1.2% premium; or a put option on 28,000,000, at exercise price of 118.000/$: a 3.5% premium.

a. What are the costs and benefits of alternative hedges? Which would you recommend, and why?

b. What is the break-even reinvestment rate when comparing forward and money market alternatives?

Krystal. Krystal is a US-based company that manufactures, sells, and installs water purification equipment. On April 11, the company sold a system to the City of Nagasaki, Japan, for installation in Nagasak's famous Glover Gardens (where Puccini's Madame Butterfly waited for the return of LL Pinkerton). The sale was priced in yen at W28.000.000, with payment due in three months. The exchange rate and interest rate data are shown in the popup window Note that the interest rate differentials vary slightly from the forward discounts on the yen because of time differences for the quotes. The spot W118215/5, for example, is a mid-point range On April 11, the spot yen traded in London from V110.182/5 to 117.2465. Krystal's Japanese competitors are currently borrowing yen from Japanese banks at a spread of two percentage points above the Japanese money rate Krystal's weighted average cost of capital is 10%, and the company wishes to protect the dollar value of this receivable 3-month options are available from Kyushu Bank: call option on 28.000.000 at exercise price of $118.000/8 a 12% premium or a put option on 28.000.000, at exercise price of 118.000 a 3.5% premium a. What are the costs and benefits of alternative hedges? Which would you recommend, and why? b. What is the break-even reinvestment rate when comparing forward and money market atematives? a. How much in U.S. dollars will Krystal receive in 3 months without a hedge if the expected spot rate in 3 months is assumed to be W118-21567 $236856 57 (Round to the nearest cent) How much in U.S. dotars will Krystal receive in 3 months with a forward market hedge? $230960.24 (Round to the nearest cent) How much in U.S. dollars will Krystal receive in 3 months with a money market hedge? $ (Round to the nearest cent) 118.215/$ (closing mid-rates) 117.723/$, a 5.02% per annum premium 116.686/$, a 5.24% per annum premium 113.133/$, a 4.49% per annum premium Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet. 1-year forward: Spot exchange rate: 1-month forward rate: 3-month forward: Differential 4.83000% 4.87500% 4.78125% Money Rates United States Japan One month 4.9250% 0.09500% Three months 4.9750% 0.10000% Twelve months 5.1000% 0.31875% Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet. n Krystal, Krystal is a US-based company that manufactures, salts, and installs water purification equipment. On April 11, the company sold a system to the City of Nagasaki, Japan, for installation in Nagasak's famous Glover Gardens (whore Puccin's Madame Butterfly waited for the return of Lt. Pinkerton). The sale was priced in yen at 428,000,000, with payment due in three months. The exchange rate and interest rate data are shown in the popup window. Note that the interest rate differentials vary slightly from the forward discounts on the yen because of time differences for the quotes. The spot 118215/5, for example, is a mid-pont range. On April 11, the spot yen traded in London from V119.182/5 to 117.248/5. Krystal's Japanese competitors are currently borrowing yen from Japanese banks at a spread of two percentage points above the Japanese money rale. Krystals weighted average cost of capital is 16%, and the company wishes to protect the dollar value of this receivable 3-month options are available from Kyushu Bank, call option on w218,000,000 at exercise price of 118.000/8 a 1.2% premium or a put option on $28,000,000, at exercise price of 118.0005: a 3.5% premium a. What are the costs and benefits of alternative hedges? Which would you recommand, and why? b. What is the break-even reinvestment rate when comparing forward and money market alternatives? a. How much in U.S. dollars wil Krystal receive in 3 months without a hedge if the expected spot rate in 3 months is assumed to be 118.215/37 $236856.57 (Round to the nearest cent.) How much in U.S. dollars will Krystal receive in 3 months with a forward market hedge? $239960.24 (Round to the nearest cent) How much in US dollars will Krystal receive in 3 months with a m (Round to the nearest cent) Help me solve this View an example na money market hedge? Get more help. Check answer Clear all oporopporcancy Krystal. Krystal is a US-based company that manufactures, sells, and installs water purification equipment. On April 11, the company sold a system to the City of Nagasaki, Japan, for installation in Nagasak's famous Glover Gardens (where Puccini's Madame Butterfly waited for the return of LL Pinkerton). The sale was priced in yen at W28.000.000, with payment due in three months. The exchange rate and interest rate data are shown in the popup window Note that the interest rate differentials vary slightly from the forward discounts on the yen because of time differences for the quotes. The spot W118215/5, for example, is a mid-point range On April 11, the spot yen traded in London from V110.182/5 to 117.2465. Krystal's Japanese competitors are currently borrowing yen from Japanese banks at a spread of two percentage points above the Japanese money rate Krystal's weighted average cost of capital is 10%, and the company wishes to protect the dollar value of this receivable 3-month options are available from Kyushu Bank: call option on 28.000.000 at exercise price of $118.000/8 a 12% premium or a put option on 28.000.000, at exercise price of 118.000 a 3.5% premium a. What are the costs and benefits of alternative hedges? Which would you recommend, and why? b. What is the break-even reinvestment rate when comparing forward and money market atematives? a. How much in U.S. dollars will Krystal receive in 3 months without a hedge if the expected spot rate in 3 months is assumed to be W118-21567 $236856 57 (Round to the nearest cent) How much in U.S. dotars will Krystal receive in 3 months with a forward market hedge? $230960.24 (Round to the nearest cent) How much in U.S. dollars will Krystal receive in 3 months with a money market hedge? $ (Round to the nearest cent) 118.215/$ (closing mid-rates) 117.723/$, a 5.02% per annum premium 116.686/$, a 5.24% per annum premium 113.133/$, a 4.49% per annum premium Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet. 1-year forward: Spot exchange rate: 1-month forward rate: 3-month forward: Differential 4.83000% 4.87500% 4.78125% Money Rates United States Japan One month 4.9250% 0.09500% Three months 4.9750% 0.10000% Twelve months 5.1000% 0.31875% Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet. n Krystal, Krystal is a US-based company that manufactures, salts, and installs water purification equipment. On April 11, the company sold a system to the City of Nagasaki, Japan, for installation in Nagasak's famous Glover Gardens (whore Puccin's Madame Butterfly waited for the return of Lt. Pinkerton). The sale was priced in yen at 428,000,000, with payment due in three months. The exchange rate and interest rate data are shown in the popup window. Note that the interest rate differentials vary slightly from the forward discounts on the yen because of time differences for the quotes. The spot 118215/5, for example, is a mid-pont range. On April 11, the spot yen traded in London from V119.182/5 to 117.248/5. Krystal's Japanese competitors are currently borrowing yen from Japanese banks at a spread of two percentage points above the Japanese money rale. Krystals weighted average cost of capital is 16%, and the company wishes to protect the dollar value of this receivable 3-month options are available from Kyushu Bank, call option on w218,000,000 at exercise price of 118.000/8 a 1.2% premium or a put option on $28,000,000, at exercise price of 118.0005: a 3.5% premium a. What are the costs and benefits of alternative hedges? Which would you recommand, and why? b. What is the break-even reinvestment rate when comparing forward and money market alternatives? a. How much in U.S. dollars wil Krystal receive in 3 months without a hedge if the expected spot rate in 3 months is assumed to be 118.215/37 $236856.57 (Round to the nearest cent.) How much in U.S. dollars will Krystal receive in 3 months with a forward market hedge? $239960.24 (Round to the nearest cent) How much in US dollars will Krystal receive in 3 months with a m (Round to the nearest cent) Help me solve this View an example na money market hedge? Get more help. Check answer Clear all oporopporcancy