NOTE: for my revision purposes, please can you clearly state everything including:

-writing the name of the formula being used e.g. (Ke = Cost of Equity, followed by the formula, then formula with the figures). This will help me when revising.

-Clearly state the steps used to get the final answer

Question 2 Pardew Limited has today placed a 600,000 order with one of its French suppliers and has been granted a trade credit period of 3 months. You have ascertained the following current market information: Offer Foreign Exchange Market / spot / 3 month forward Bid 1.1225 1.1235 5 discount 20 premium Deposit Rate Money Market United Kingdom Eurozone Borrowing Rate 1.2% 1.0% 0.4% 0.6% Required: (4) Using the above information, provide calculations and advise the company whether it should hedge its foreign exchange transaction risk by using a forward contract or a money market hedge. (8 marks) Question 2 Pardew Limited has today placed a 600,000 order with one of its French suppliers and has been granted a trade credit period of 3 months. You have ascertained the following current market information: Offer Foreign Exchange Market / spot / 3 month forward Bid 1.1225 1.1235 5 discount 20 premium Deposit Rate Money Market United Kingdom Eurozone Borrowing Rate 1.2% 1.0% 0.4% 0.6% Required: (4) Using the above information, provide calculations and advise the company whether it should hedge its foreign exchange transaction risk by using a forward contract or a money market hedge. (8 marks)