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please help Aztec Inc. sold equipment to one of its British customers in the amount of 1,500,000. According to the payment terms in the contract,
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Aztec Inc. sold equipment to one of its British customers in the amount of 1,500,000. According to the payment terms in the contract, Aztec is to receive full payment in 90 days. Aztec's management has asked you to assist in analyzing their hedging options as they fear the pound could lose value. Given the information below, you need to analyze each hedging strategy and provide them with a recommendation. Amount to hedge 1,500,000 Current Spot $1.760 Forward Rate $1.750 Aztec's WACC 12% 3-month rate information (per annum) US pa. UK.p.a. Borrowing 6% 10% Investing 4% 6% 3-mth options information for hedged amount Strike price Premium Call option $1.750 3.00% Put option $1.720 2.00% What is the value of the forward hedge? Round to nearest integerStep by Step Solution
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