Question
Microsoft Corporation enters into a forward contract to hedge against the foreign currency risk associated with a future purchase of equipment costing 500,000. The forward
Microsoft Corporation enters into a forward contract to hedge against the foreign currency risk associated with a future purchase of equipment costing €500,000. The forward contract specifies a forward rate of $1.20/€, and the spot rate at year-end is $1.15/€. Calculate the gain or loss on the forward contract.
Transaction | Amount |
Forward Rate | $1.20/€ |
Spot Rate (Year-end) | $1.15/€ |
Transaction Amount (in euros) | €500,000 |
Gain/Loss on Forward Contract |
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International Accounting
Authors: Timothy Doupnik, Hector Perera
4th edition
77862201, 978-0077760298, 77760298, 978-0077862206
