Disadvantage to hedging using forward contract

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Reference no: EM131819534

Intel Corporation has euros 100 million payables that need to be paid in 90-days. The current spot exchange rate is $1.1805/euro. The 90-day forward rate is $1.1846/euro. If Intel wants to hedge its payables in euro 100 million, suggest a suitable hedging strategy using the forward contract and compute the total cost with the forward rate. If 90-days later the spot rate turned out to be $1.2152/euro, compute any advantage/disadvantage to hedging using the forward contract.

Reference no: EM131819534

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