Australian dollars in two years for equipment

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New York Co. has agreed to pay 10 million Australian dollars (A$) in two years for equipment that it is importing from Australia. The spot rate of the Australian dollar is $.60. The annualized U.S. interest rate is 4%, regardless of the debt maturity. The annualized Australian dollar interest rate is 12% regardless of the debt maturity. New York plans to hedge its exposure with a forward contract that it will arrange today. Assume that interest rate parity exists. Determine the amount of U.S. dollars that New York Co. will need in 2 years to make its payment. $5,173,000 $5,571,428 $4,173,000 $4,571,428

Reference no: EM131510736

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