please answer all
Najafi Company. Najafi Company, U S -based manulacturer of industnal oqu pment, just purchased a Korean company that produces plastic nuts and bolts for heavy equipment. The purchase price was 7,300 million Korean won (KRW) KRW1,000 million has already been paid, and the remaining KRW6,300 milion is due in sox months. The curtent spot rate is KRW1,113 = USD1 00 , and the 6.month forward rate is KRW1, 173= USD1 00 . The 6 -month Korean won interest rate is 165% per annum, the 6-month U.S dollar rate is 3% per annum Najafi can invest at these interest rates, or borrow at 2% per annum above those rates A 6 mont call opton on won with a KRW 1,200 = USD 100 strike rate has a 36% premium while the 6 -month put option at the same strike rate has a 30% premium Najafi's weighted average cost of capital is 11.5%. Compare altemate ways below that Najafi might deal with its foreign exchange exposure a. How much in US dollars will Najafi pay in 6 months wthout a hedge if the expected spol rate in 6 months is assumed to be KRW1,113 = USD1. 00? KRW1.173=USD1:00 ? b. How much in US. dollars will Najafi pay in 6 months with a forward market hedge? c. How much in US dollars wil Najafi pay in 6 months with a money market hedge? d. How much in U.S dollars will Najafi pay in 6 months with an option hedge it the expected spot rate n 6 months is assumed to be less than KFW1 200= USD1 00 ? To be KRW 1,300= USD1 00 ? e. What do you fecommend? Najafi Company. Najafi Company, US. based mavudacturer of noustrual equipment, just purchosed a Korean company that produces plastic nuts and boits for heavy otuipment The purchase price was 7.300m ilion Korean won (KRW). KRW 1.000 mullion has alteady been paid and the remaining KRWb,300 malion is. due an stk monttes The curtent spod rate is KRW1,113 USD1 00 and bie 6 mionth forWard rate is KRW1, 173=USD1 00 The 6 month Korean won interest rete is 16.5% per annum, the 6-month US dollar rate is 3% per annum Najaf can igyest at fhese interest rates, or borrow at 2%6 per annum above those rates. A 6 month call option on woe with a KRW 1,200=USD: 00 strke rate has 3.3.6% premum while the 6 imonth put option at tho same strike rate has a 3.0% premiurn Najalis weighted average cost of capital is 11.5% Gompare alternate mays below that Navafi might deal with its foregn oxchange exposute KRWV 173 = USD 1.009 b. How much in US. dollars wit Nojaf pay in 6 mocths with a forward ramket hedge? 6. How much in US dollars will Najafi par in 6 months wht a moner market hwdge? KrWV1 200 I USDA oor to be KCPW1 300 W USDt 00 ? e. What do you foconinend? Najafi Company. Najafi Company, U S -based manulacturer of industnal oqu pment, just purchased a Korean company that produces plastic nuts and bolts for heavy equipment. The purchase price was 7,300 million Korean won (KRW) KRW1,000 million has already been paid, and the remaining KRW6,300 milion is due in sox months. The curtent spot rate is KRW1,113 = USD1 00 , and the 6.month forward rate is KRW1, 173= USD1 00 . The 6 -month Korean won interest rate is 165% per annum, the 6-month U.S dollar rate is 3% per annum Najafi can invest at these interest rates, or borrow at 2% per annum above those rates A 6 mont call opton on won with a KRW 1,200 = USD 100 strike rate has a 36% premium while the 6 -month put option at the same strike rate has a 30% premium Najafi's weighted average cost of capital is 11.5%. Compare altemate ways below that Najafi might deal with its foreign exchange exposure a. How much in US dollars will Najafi pay in 6 months wthout a hedge if the expected spol rate in 6 months is assumed to be KRW1,113 = USD1. 00? KRW1.173=USD1:00 ? b. How much in US. dollars will Najafi pay in 6 months with a forward market hedge? c. How much in US dollars wil Najafi pay in 6 months with a money market hedge? d. How much in U.S dollars will Najafi pay in 6 months with an option hedge it the expected spot rate n 6 months is assumed to be less than KFW1 200= USD1 00 ? To be KRW 1,300= USD1 00 ? e. What do you fecommend? Najafi Company. Najafi Company, US. based mavudacturer of noustrual equipment, just purchosed a Korean company that produces plastic nuts and boits for heavy otuipment The purchase price was 7.300m ilion Korean won (KRW). KRW 1.000 mullion has alteady been paid and the remaining KRWb,300 malion is. due an stk monttes The curtent spod rate is KRW1,113 USD1 00 and bie 6 mionth forWard rate is KRW1, 173=USD1 00 The 6 month Korean won interest rete is 16.5% per annum, the 6-month US dollar rate is 3% per annum Najaf can igyest at fhese interest rates, or borrow at 2%6 per annum above those rates. A 6 month call option on woe with a KRW 1,200=USD: 00 strke rate has 3.3.6% premum while the 6 imonth put option at tho same strike rate has a 3.0% premiurn Najalis weighted average cost of capital is 11.5% Gompare alternate mays below that Navafi might deal with its foregn oxchange exposute KRWV 173 = USD 1.009 b. How much in US. dollars wit Nojaf pay in 6 mocths with a forward ramket hedge? 6. How much in US dollars will Najafi par in 6 months wht a moner market hwdge? KrWV1 200 I USDA oor to be KCPW1 300 W USDt 00 ? e. What do you foconinend
