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Looney Corp. has net payables of 750,000 euros due in 270 days. The German interest rate (where Looney has operations) is 9% over the 270
Looney Corp. has net payables of 750,000 euros due in 270 days. The German interest rate (where Looney has operations) is 9% over the 270 day period and the current spot rate of the euro is $1.32. If Looney were to use a money market hedge to cover the payables (borrow U.S. dollars, invest in Germany and use the exact value of the proceeds, principal plus interest, to pay off the amount due in euros), how much does Looney need to borrow in dollars today (round to the nearest dollar)?
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