Calculate the amount that MNC expects to receive

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Question - On October 1, a Multinational Corporation (MNC) received an order from a Japanese customer for 2,500,000 Yen to be paid upon receipt of the goods, scheduled for December 1. The rates for $1 US are as follows:

Exchange Rates for $1 for Yen

Spot rate, October 1 83

Forward rate, December 1 82

Spot rate, December 1 81

a) Calculate what MNC would receive from the Japanese customer in US dollars using the spot rate at the time of the order.

b) Calculate what MNC would receive from the Japanese customer in US dollars using the spot rate at the time of payment.

c) Calculate the amount that MNC expects to receive on December 1 if MNC's policy is to hedge foreign currency transactions. d) Briefly discuss implications.

Reference no: EM132947351

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