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theres 5 parts to this question Homework: C... Question 2. Problem 10-... Part 2 of 5 HW Score: 51.83%, 7.78 of 15 points Points: 0,4
theres 5 parts to this question
Homework: C... Question 2. Problem 10-... Part 2 of 5 HW Score: 51.83%, 7.78 of 15 points Points: 0,4 of 2 Save Elan Pharmaceuticals. Elan Pharmaceuticals, a U.S.-based multinational pharmaceutical company, is evaluating an export sale of its cholesterol-reduction drug with a prospective Indonesian distributor. The purchase would be for 1.600 million Indonesian rupiah (Rp), which at the current spot exchange rate of Rp9,420/5 translates into $169,851.38. Although not a big sale by company standards, company policy dictates that sales must be settled for at least a minimum gross margin, in this case, a cash settlement of $163,000. The current 90-day forward rate is Rp9,920/$. Although this rate appeared unattractive, Elan had to contact several major banks before even finding a forward quote on the rupiah. The consensus of currency forecasters at the moment, however, is that the rupiah will continue to strengthen, possibly rising to Rp10,160/S over the coming 90 to 120 days. Analyze the prospective sale and make a hedging recommendation How much in U.S. dollars will Elan receive in 90 days without a hedge if the expected spot rate in 90 days is assumed to be Rp9,420/$? $ 169851.38 (Round to the nearest cent.) How much in U.S. dollars will Elan receive in 90 days without a hedge if the expected spot rate in 90 days is assumed to be Rp10,160/5? (Round to the nearest cent.) Step by Step Solution
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