P&G India. Procter and Gamble's affiliate in India, P&G India, procures much of its toiletries product line from a Japanese company. Because of the shortage of working capital in India, payment terms by Indian importers are typically 180 days or longer. P&G India wishes to hedge an 8.5 million Japanese yen payable. Although options are not available on the Indian rupee (Rs), forward rates are available against the yen. Additionally, a common practice in India is for companies like P&G India to work with a currency agent who will, in this case, lock in the current spot exchange rate in exchange for a 4.82% fee. Using the exchange rate and interest rate data in the popup window, compare alternate ways below that P&G India might deal with its foreign exchange exposure. Assume a 360-day financial year. a. How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.50644/Rs? 2.4204/Rs? 2.6478/Rs? b. How much in Indian rupees will P&G India pay in 180 days with a forward market hedge? c. How much in Indian rupees will P&G India pay in 180 days with a money market hedge? d. How much in Indian rupees will P&G India pay in 180 days with a currency agent hedge? e. What do you recommend? a. How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.50644/Rs? Rs(Round to the nearest whole number.) How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be Y2.4204/Rs? Rs (Round to the nearest whole number.) How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.6478/Rs? Rs (Round to the nearest whole number.) b. How much in Indian rupees will P&G India pay in 180 days with a forward market hedge? Rs (Round to the nearest whole number.) c. How much in Indian rupees will P&G India pay in 180 days with a money market hedge? Rs (Round to the nearest whole number.) d. How much in Indian rupees will P&G India pay in 180 days with a currency agent hedge? Rs(Round to the nearest whole number.) e. What do you recommend? (Select from the drop-down menu.) The provides the lowest certain cost hedging method for payment settlement. P&G India. Procter and Gamble's affiliate in India, P&G India, procures much of its toiletries product line from a Japanese company. Because of the shortage of working capital in India, payment terms by Indian importers are typically 180 days or longer. P&G India wishes to hedge an 8.5 million Japanese yen payable. Although options are not available on the Indian rupee (Rs), forward rates are available against the yen. Additionally, a common practice in India is for companies like P&G India to work with a currency agent who will, in this case, lock in the current spot exchange rate in exchange for a 4.82% fee. Using the exchange rate and interest rate data in the popup window, compare alternate ways below that P&G India might deal with its foreign exchange exposure. Assume a 360-day financial year. a. How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.50644/Rs? 2.4204/Rs? 2.6478/Rs? b. How much in Indian rupees will P&G India pay in 180 days with a forward market hedge? c. How much in Indian rupees will P&G India pay in 180 days with a money market hedge? d. How much in Indian rupees will P&G India pay in 180 days with a currency agent hedge? e. What do you recommend? a. How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.50644/Rs? Rs(Round to the nearest whole number.) How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be Y2.4204/Rs? Rs (Round to the nearest whole number.) How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.6478/Rs? Rs (Round to the nearest whole number.) b. How much in Indian rupees will P&G India pay in 180 days with a forward market hedge? Rs (Round to the nearest whole number.) c. How much in Indian rupees will P&G India pay in 180 days with a money market hedge? Rs (Round to the nearest whole number.) d. How much in Indian rupees will P&G India pay in 180 days with a currency agent hedge? Rs(Round to the nearest whole number.) e. What do you recommend? (Select from the drop-down menu.) The provides the lowest certain cost hedging method for payment settlement
