Question Help Krystal Krystalls a US-based company that manufactures, ils and installs water purification equipment. On April 11, the company sold a system to the Puccini's Madame Butterfly waited for the reum of Li. Pinkerton. The sale was priced in yon at 29,000,000, with payment in three months. The char Japan, for installation in Nagasak's famous Glover Gardens (where cterest rate data are shown in the popup Window a Note that the interest rate ferential vary slightly from the forward discounts on the yen because of time differences for the quotes. The spot 117.900/5, for example is a mid-point range on April 11, the spot yen traded in London from 118.866/5 to 1116.90/6. Krystal's Japanese competitions are currently borrowing yen from Japanese banks at a spread of two percentage points above the Japanese money rate. Krystal weighted average cost of capitalis 15.59, and the company wishes to protect the dolar value of this receivable. 3-month options are www from Kyushu Bank call option on 29.000.000 exercise price of 117.000$. a 2% premium or a put option on 20.000.000 af mercise price of 117.000$. a 4 premium What are the costs and benefits of ammativ hedges? Which would you recommend, and why? b. What is the break-even reinvestment when comparing forward and money market leatives? a. How much in US. Will Krystal receive in 3 months without a hedge if the expected spot in 3 months med to be 117.306/5? S o und to the nearestent) Problem 10-7 (algorithmic) Question Help Krystal Krystals a s based company that manufactures, ses and instal winer purification equipment. On April 11, the company sold a system to the Cry of Nagasaki Japan, for insation in Nagars famous Glover Gardens (where Pucois Madame Butterfly waited for the rolumn of L. Pinkerton. The sale was priced in yen at 20.000.000, with payment due in three months. The exchange rate and interest rate data are shown in the popup window Note that the interest rated Perennials vary slightly from the forward discounts on the yon because of time differences for the quotes. The spot 117.900/5.fore s pin ge on April 11, the spot yen traded in London from 1116.85575 to 116.966 5. Krysta's Japanese competitors are Currently borrowing yon from Japanese banks at a spread of two percentage points above the Japanese money Krystal's weighted average cost of capital 15.5%, and the company wishes to protected ar value of the receive 3-month options are availrom Kyuu Bank call option on 20.000,000 atar e proof 117.000 5:a 2% premium or a put option on 20.000.000, price of 117.000 a premium 8. What we and benefits of wome oges? Which would you recommend, and why? b. What is the break-even reinvestment rate when comparing forward and money maratones? a. How much in U.S. dollars will receive in ons without a hedge if the expected spot in 3 months assumed to be 117.900/3? S o und to the rest cent) Question Help Krystal Krystalls a US-based company that manufactures, ils and installs water purification equipment. On April 11, the company sold a system to the Puccini's Madame Butterfly waited for the reum of Li. Pinkerton. The sale was priced in yon at 29,000,000, with payment in three months. The char Japan, for installation in Nagasak's famous Glover Gardens (where cterest rate data are shown in the popup Window a Note that the interest rate ferential vary slightly from the forward discounts on the yen because of time differences for the quotes. The spot 117.900/5, for example is a mid-point range on April 11, the spot yen traded in London from 118.866/5 to 1116.90/6. Krystal's Japanese competitions are currently borrowing yen from Japanese banks at a spread of two percentage points above the Japanese money rate. Krystal weighted average cost of capitalis 15.59, and the company wishes to protect the dolar value of this receivable. 3-month options are www from Kyushu Bank call option on 29.000.000 exercise price of 117.000$. a 2% premium or a put option on 20.000.000 af mercise price of 117.000$. a 4 premium What are the costs and benefits of ammativ hedges? Which would you recommend, and why? b. What is the break-even reinvestment when comparing forward and money market leatives? a. How much in US. Will Krystal receive in 3 months without a hedge if the expected spot in 3 months med to be 117.306/5? S o und to the nearestent) Problem 10-7 (algorithmic) Question Help Krystal Krystals a s based company that manufactures, ses and instal winer purification equipment. On April 11, the company sold a system to the Cry of Nagasaki Japan, for insation in Nagars famous Glover Gardens (where Pucois Madame Butterfly waited for the rolumn of L. Pinkerton. The sale was priced in yen at 20.000.000, with payment due in three months. The exchange rate and interest rate data are shown in the popup window Note that the interest rated Perennials vary slightly from the forward discounts on the yon because of time differences for the quotes. The spot 117.900/5.fore s pin ge on April 11, the spot yen traded in London from 1116.85575 to 116.966 5. Krysta's Japanese competitors are Currently borrowing yon from Japanese banks at a spread of two percentage points above the Japanese money Krystal's weighted average cost of capital 15.5%, and the company wishes to protected ar value of the receive 3-month options are availrom Kyuu Bank call option on 20.000,000 atar e proof 117.000 5:a 2% premium or a put option on 20.000.000, price of 117.000 a premium 8. What we and benefits of wome oges? Which would you recommend, and why? b. What is the break-even reinvestment rate when comparing forward and money maratones? a. How much in U.S. dollars will receive in ons without a hedge if the expected spot in 3 months assumed to be 117.900/3? S o und to the rest cent)
