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Account receivable from a japanese customer

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An Australian organization has a ¥40,000,000 account receivable from a Japanese customer in 2 months. The current Japanese yen (¥)/Australian Dollar (A$) spot exchange rate is ¥87.35/A$. The Australian organization expects the spot rate in 2 months to be ¥91.45/A$. The 2-month forward exchange rate is ¥89.50/A$. The Australian Dollar (A$) 2-month borrowing rate is 6.00% per annum, and the Australian Dollar (A$) 2-month investment rate is 4.00% per annum. The Japanese yen (¥) 2-month borrowing rate is 8.00% per annum, and the Japanese yen (¥) 2-month investment rate is 3.20% per annum. The organization's weighted average cost of capital is 10% per annum. The organization is considering three positions: remaining unhedged, using forward market hedge, and using money market hedge. Which of these positions should the organization adopt?

Reference no: EM132524518

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