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Calculate the forward exchange rate agreed with bank

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Reference no: EM132788196

You are a Canadian importer The following criteria is to be applied.Term 95daysSpot rate 1.5625 Cdn$/Euro of German steel and wish to engage in a foreign exchange contract with your bank to hedge the payment against currency fluctuations during the credit period. You agree with the exporter's offer of a 95 day credit term for payment. The amount of the contract is Euros 3,500,000.

Interest Rate Canada 5.00% per annum

Interest Rate Germany 7.00% per annum

Q1. A) Calculate the forward exchange rate agreed with your bank

B) Calculate the payment amount due in Canadian Dollars.

Reference no: EM132788196

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