Suppose KSBtech, Inc. is a U.S. company with the following foreign exchange Canadian dollar (CAD) and Euro (EUR) cash flows due in 6 months (on October 1) :

Inflow Outflow

Canadian dollar CAD1,600,000 CD500,000

Euros Euro 150,000 Euro 725,000

Suppose today is April 1 and the U.S. company KSBtech wishes to hedge its expected net (inflows-outflows) transaction exposure in each currency using a 6-month forward contract that matures on October 1, 2021. Suppose it is given the quotes below:

April 1 Spot Quotes:

Spot #CAD/1$ = CA 1.248/$

Spot #$/1EUR = $1.1750/EUR

6-month forward rates:

6-mo forward #CAD/1$= CAD 1.254/$

6-mo forward #$/1EUR = $1.178/EUR

Answer parts (a) and (b):

a) Given the quotes below, how many U.S. dollars will KSBtech pay or receive on its Canadian dollar position if it hedges it net CAD exposure in the forward market? Is it paying or receiving this amount and when are the $ paid or received?

b) How many U.S. dollars will KSBtech pay or receive on its Euro position it it hedges its net EUR exposure in the forward market? Is it paying or receiving this amount and when are the $ paid or received?