SHOW ALL WORK - Answer Question 4

Heavy Equipment Inc. a US-based manufacturer of heavy industrial equipment just sold the equipment for 6,000,000 to a company in Germany. According to the terms of sale, the buyer is allowed to make a payment in 4 months (120 days). As a hedging specialist, you need to explore different ways of hedging Heavy Equipment's transaction exposure and to advise on the hedging strategy. Q\#1: Compute the proceeds of remain uncovered (1 point) Q\#2: Compute the proceeds of the forward market hedge (1 point) Q\#3: Compute the proceeds of money market hedge (4 points) QH4: Compute the proceeds of the option hedge (4 points) Q\#5: What hedging alternative would you advise for Heavy Equipment Inc? (1 point) You must show your work (provide all calculations here). Providing only answers will result in zero points. Q\#4: Compute the proceeds of the option hedge (4 points) Q\#5: What hedging alternative would you advise for Heavy Equipment Inc.? (1 point)