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Determine the expected australian dollar receipts

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Reference no: EM132955389

Noman Co is an Australian company with the following transactions: Company Transactions

Gateway Ltd Expected receipt of £360,000 in one month's time

Gateway Ltd Expected payment of £210,000 in one month's time

Modern Pte Ltd Expected receipt of £380,000 in three months' time

The following information is relevant to Noman Co:

One-month forward rates (£/AUD$1) 0.55220 - 0.55229

Spot rate (£/AUD$1) 0.55226 - 0.55235

Australian Dollar $ Pound sterling £

Deposit Borrowing Deposit Borrowing

Interest rate per year 5% 5.8% 5.2% 6%

Required:

a. cfrom UK Company, Modern Pte Ltd in three months' time using a money market hedge.

b. Assuming Noman Co and Gateway Ltd agreed to apply bilateral matching to mitigate the currency exposure. Determine the net amount of payment or receipt by Noman Co in Australian Dollar.

Reference no: EM132955389

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