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SPOT AND FORWARD RATES Arvin Australian Imports has agreed to purchase 10,000 cases of Australian wine for 5 million Australian dollars at today's spot rate.

SPOT AND FORWARD RATES

Arvin Australian Imports has agreed to purchase 10,000 cases of Australian wine for 5 million Australian dollars at today's spot rate. The firm's financial manager, Sarah Vintnor, has noted the following current spot and forward rates:

U.S. Dollar/Australian Dollar Australian Dollar/U.S. Dollar
Spot 0.7676 1.3028
30-day forward 0.7664 1.3048
90-day forward 0.7650 1.3072
180-day forward 0.7613 1.3135

On the same day, Vintnor agrees to purchase 10,000 more cases of wine in 3 months at the same price of 5 million Australian dollars.

  1. What is the price of the wine in U.S. dollars if it is purchased at today's spot rate? Round your answer to the nearest cent. $
  2. What is the cost in U.S. dollars of the second 10,000 cases if payment is made in 90 days and the spot rate at that time equals today's 90-day forward rate? Round your answer to the nearest cent. $
  3. If the exchange rate for the Australian dollar is 1.2477 to $1 in 90 days, how much will Vintnor have to pay for the wine (in U.S. dollars)? Round your answer to the nearest cent. $

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