Taylor Swifts Exchange Rate Problem

Taylor Swift is going on tour to Japan in March 2019. She is going to have between three and six concerts in Japan. Once Taylor sells out three concerts she will put another concert on sale.

She is Taylor Swift, so knows she will definitely sell out three concerts in Japan because of the large number of Japanese members of her fan club. (You can download the Swift Life app on iOS to be a Taylor Swift fan.) She is uncertain whether she will end up having 3, 4, 5 or 6 concerts in Japan. She believes each number of concerts is equally likely.

The fixed cost of going to Japan for the Taylot Swift Reputation Tour is 800,000,000. The variable cost of stadium personal, consumable explosives, ect. is 170,000,000 per show for each show.

The average price of a ticket to see Taylor Swifts Reputation concert is 12,800. The Japanese venue has 55,000 seats.

The current spot price of the =$0.089. The March 2019 forward rate is =$0.086. March 2019 call options for a strike price of =$0.089 have a call option premium of $0.007. March 2019 put options for a strike price of =$0.089 have a put option premium of $0.004.

Taylor wants to forecast how changes in the Japanese Yen and the number of concerts she has in Japan will affect the USD value of her net Yen receivables from the Japanese leg of the Reputation concert tour. She wants to compare three scenarios:

Weak : The yen drops in value to =$0.0079.

Unchanged : The yen remains unchanged at =$0.0089

Strong : The yen increases in value to =$0.0099.

Taylor already asked Calvin Harris, Harry Styles, Conor Kennedy, Jake Gyllenhaal, Taylor Lautner, John Mayer, and Joe Jonas for help with her exchange rate problem. They got mad and are no longer speaking to Taylor. Can you help Taylor Swift with her exchange rate problem?

First consider what happens if she doesnt hedge her exchange rate exposure.

What are her net receivables depending on the number of concerts? What is the U.S. dollar value of her receivables depending on the number of concerts (3, 4, 5, or 6) and the spot rate of the yen in March (=$0.0079 or =$0.0089 or =$0.0099)? Use the following table:

Number of Concerts	net yen receivables	yen = .0079 USD value of net receivables	=$0.0089 USD value of net receivables	=$0.0099 USD value of net receivables
3
4
5
6

Calvin Harris tweeted that she should just hedge the most yen that she might possible receive using a forward contract. If she followed this advice, what are her net receivables depending on the number of concerts? What is the U.S. dollar value of her receivables depending on the number of concerts (3, 4, 5, or 6) and the spot rate of the yen in March (=$0.0079 or =$0.0089 or =$0.0099)?

Number of Japenese concerts	Net yen receivables	yen = .0079 USD value of net receivables	=$0.0089 USD value of net receivables	=$0.0099 USD value of net receivables
3
4
5
6

Is Calvin Harris really providing sound advice to Taylor Swift? Why or why not?

What would you advise Taylor Swift to do?

If she followed your advice, what are her net receivables depending on the number of concerts? What is the U.S. dollar value of her receivables depending on the number of concerts (3, 4, 5, or 6) and the spot rate of the yen in March (=$0.0079 or =$0.0089 or =$0.0099)?

Number of Japenese concerts	Net yen receivables	Yen = .0079 USD value of net receivables.	=$0.0089 USD value of net receivables	=$0.0099 USD value of net receivables
3
4
5
6

Please help solve this problem by filling out tables and answering the question. Please and thank you