Mauna Loa Macadamia.$$Mauna Loa$$ Macadamia, a macadamia nut subsidiary of$$ Hershey's with plantations on the slopes of its namesake volcano in$$ Hilo, Hawaii, exports macadamia nuts worldwide. The Japanese market is its biggest export$$ market, with average annual sales invoiced in yen to Japanese customers of yen

$1$ comma $800$ comma $000$ comma $000.$

At the present exchange rate of yen

$122/$$$,$

this is equivalent to $$$$14$ comma $754$ comma $098$

$.$

Sales are relatively equally distributed throughout the year. They show up as a yen $37$ comma $500$ comma $000$

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 yen

$150$ comma $000$ comma $000.$

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 $4\mathrm{.}50$

$\%.$

a$.$ How much should Mauna Loa borrow in U$.$S$.$ dollars?

b$.$ What should be the terms of payment on the yen$$ loan?Mauna Loa Macadamia. Mauna Loa Macadamia, a macadamia nut subsidiary of Hershey's with plantations on

the slopes of its namesake volcano in Hilo, Hawaii, exports macadamia nuts worldwide. The Japanese market is

its biggest export market, with average annual sales invoiced in yen to Japanese customers of $1,800,000,000.$

At the present exchange rate of $\frac{122}{\text{\$}},$ this is equivalent to $$14,754,098.$ Sales are relatively equally distributed

throughout the year. They show up as a $37,500,000$ 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

$150,000,000.$ 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 $4\mathrm{.}50\%.$

a$.$ How much should Mauna Loa borrow in U$.$S$.$ dollars?

b$.$ What should be the terms of payment on the yen loan?