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Mauna Loa Macadamia. Mauna Loa Macadamia, a macadamia nut subsidiary of Hershey's with plantations on the slopes of its namesake volcano in Hilo Hawai, sports

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Mauna Loa Macadamia. Mauna Loa Macadamia, a macadamia nut subsidiary of Hershey's with plantations on the slopes of its namesake volcano in Hilo Hawai, sports macadamia nuts worldwide. The Japanese market its biggest export market, with average annual sales invoiced in yen to Japanese customers of V1,800,000,000 At the present exchange rate f V128/S, this is equivalent to $14,062,500 Sales are relatively equally distributed throughout the year. They show up as a V37.500,000 account receivable on Mauna Loa's balance sheet. Credit terms to each customer allow for 60 days before payment is due. Monthly cash collections are typically V150,000,000 Mauna Loa would like to hedge its yen receipts, but it has too many customers and transactions to make it practical to sell each receivable forward. It does not want to use options because they are considered to be too expensive for this particular purpose. Therefore, they have decided to use a "matching" hedge by borrowing yen Assume the annual interest rate on the loan is 5.00% a. How much should Mauna Loa borrow in US dollars? b. What should be the terms of payment on the yen loan? KEER

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