Part A

The Louisville Slugger Company is a U$.$S$.-$based manufacturer and exporter of wood baseball bats. On November $1,$ Year $1,$ Louisville sold and shipped baseball bats to an overseas customer for a price totaling $600,000$ Foreign Currency Units $($FCUs$).$ Payment is to be received on April $30,$ Year $2.$

The Treasurer is concerned that the FCU will weaken during this period. Accordingly, on the date of sale, Louisville entered into a six$-$month forward contract with TD Bank to sell $600,000$ FCUs. The forward contract is properly designated as a cash flow hedge of a foreign currency receivable. Louisville's incremental borrowing rate is $12\%.$ The present value factor for four$-$months at a borrowing rate of $12$ percent $(1$ percent per month$)$ is $\mathrm{.}9610.$ Relevant exchange rates are as follows:

$\backslash$table$[[$Date$,\backslash$table$[[$Spot$],[$Rate$]],\backslash$table$[[$Forward Rate$],[($to April $30,$ Year $2)]]],[$November $1,$ Year $1.,$$$0\mathrm{.}23,$$$0\mathrm{.}22$