Question
The LBC, imports equipment from HBC in Canada. With the steady decline of the U.S dollar against the Canadian dollar LBC is finding a continued
The LBC, imports equipment from HBC in Canada. With the steady decline of the U.S dollar against the Canadian dollar LBC is finding a continued relationship with HBC to be an increasingly difficult proposition. In response to LBC's request, HBC has proposed the following risk-sharing arrangement. First, set the current spot rate as the base rate of C$1.500/?. As long as spot rates stay within 5% (C$1.575/? and C$1.425/?) LBC will pay at the base rate. Any rate outside of the 5% range, HBC will share equally with LBC the difference between the spot rate and the base rate.
a) If LBC has a payable of C$100,000 due today and the current spot rate is C$1.550/?, how much does LBC owe in euros? Please show calculation c) If LBC has a payable of C$100,000 due today and the current spot rate is C$1.650/?, how much does LBC owe in euros? Please show calculation
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