Maria Gonzalez and Ganado. Ganadothe U.S.-based company discussed in this chapterhas concluded another large sale of telecommunications equipment to Regency (U.K.). Total payment of 3,600,000 is due in 90 days. Maria Gonzalez has also learned that Ganado will only be able to borrow in the United Kingdom at 14.533% per annum (due to credit concerns of the British banks). Given the exchange rates and interest rates in the popup window, , compare alternate ways below that Ganado might hedge its foreign exchange transaction exposure. Assume a 360-day financial year. a. How much in U.S. dollars will Ganado receive in 90 days without a hedge if the expected spot rate in 90 days is the same as the current spot rate of $1.7503/? The 90-day forward rate of $1.7305/? The expected spot rate of $1.7878/? b. How much in U.S. dollars will Ganado receive in 90 days with a forward market hedge? c. How much in U.S. dollars will Ganado receive in 90 days with a money market hedge? d. How much in U.S. dollars will Ganado receive in 90 days with an option market hedge? e. What transaction exposure hedge is now in Ganado's best interest? Burton Manufacturing. Jason Stedman is the director of finance for Burton Manufacturing, a U.S.-based manufacturer of handheld computer systems for inventory management. Burton's system combines a low-cost active tag that is attached to inventory items (the tag emits an extremely low-grade radio frequency) with custom designed hardware and software that tracks the low-grade emissions for inventory control. Burton has completed the sale of an inventory management system to a British firm, Pegg Metropolitan (UK), for a total payment of 1,800,000. The exchange rates shown in the popup window, B, were available to Burton on the dates shown, corresponding to the events of this specific export sale. Assume each month is 30 days. a. What will be the amount of foreign exchange gain (loss) upon settlement? b. If Jason hedges the exposure with a forward contract, what will be the net foreign exchange gain (loss) on settlement? Data Table - 3 Date Event Spot Rate ($/) Forward Rate ($/) Days Forward February 1 Price quotation for Pegg 1.7849 1.7770 210 March 1 Contract signed for sale 1.7305 1.7223 180 Contract amount, pounds 1,800,000 June 1 Product shipped to Pegg 1.7648 1.7574 90 August 1 Product received by Pegg 1.7884 1.7862 30 September 1 Pegg makes payment 1.7292 Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet. Print Done Maria Gonzalez and Ganado. Ganadothe U.S.-based company discussed in this chapterhas concluded another large sale of telecommunications equipment to Regency (U.K.). Total payment of 3,600,000 is due in 90 days. Maria Gonzalez has also learned that Ganado will only be able to borrow in the United Kingdom at 14.533% per annum (due to credit concerns of the British banks). Given the exchange rates and interest rates in the popup window, , compare alternate ways below that Ganado might hedge its foreign exchange transaction exposure. Assume a 360-day financial year. a. How much in U.S. dollars will Ganado receive in 90 days without a hedge if the expected spot rate in 90 days is the same as the current spot rate of $1.7503/? The 90-day forward rate of $1.7305/? The expected spot rate of $1.7878/? b. How much in U.S. dollars will Ganado receive in 90 days with a forward market hedge? c. How much in U.S. dollars will Ganado receive in 90 days with a money market hedge? d. How much in U.S. dollars will Ganado receive in 90 days with an option market hedge? e. What transaction exposure hedge is now in Ganado's best interest? Burton Manufacturing. Jason Stedman is the director of finance for Burton Manufacturing, a U.S.-based manufacturer of handheld computer systems for inventory management. Burton's system combines a low-cost active tag that is attached to inventory items (the tag emits an extremely low-grade radio frequency) with custom designed hardware and software that tracks the low-grade emissions for inventory control. Burton has completed the sale of an inventory management system to a British firm, Pegg Metropolitan (UK), for a total payment of 1,800,000. The exchange rates shown in the popup window, B, were available to Burton on the dates shown, corresponding to the events of this specific export sale. Assume each month is 30 days. a. What will be the amount of foreign exchange gain (loss) upon settlement? b. If Jason hedges the exposure with a forward contract, what will be the net foreign exchange gain (loss) on settlement? Data Table - 3 Date Event Spot Rate ($/) Forward Rate ($/) Days Forward February 1 Price quotation for Pegg 1.7849 1.7770 210 March 1 Contract signed for sale 1.7305 1.7223 180 Contract amount, pounds 1,800,000 June 1 Product shipped to Pegg 1.7648 1.7574 90 August 1 Product received by Pegg 1.7884 1.7862 30 September 1 Pegg makes payment 1.7292 Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet. Print Done