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Estimate amount of hong kong dollars that boston receive

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Boston Co. will receive 1 million euros in one year from selling exports. It did not hedge this future transaction. Boston believes that the future value of the euro will be determined by purchasing power parity (PPP). It expects that inflation in countries using the euro will be 10 percent next year, while inflation in the United States will be 6 percent next year. Today the spot rate of the euro is $1.43, and the one-year forward rate is $1.49

Discussion 1: Estimate the amount of U.S. dollars that Boston will receive in one year when converting its euro receivables into U.S. dollars. Do not round intermediate calculations. Round your answer to the nearest dollar.

Discussion 2: Today, the spot rate of the Hong Kong dollar is pegged at $0.14. Boston believes that the Hong Kong dollar will remain pegged to the dollar for the next year. If Boston Co. decides to convert its 1 million euros into Hong Kong dollars instead of U.S. dollars at the end of one year, estimate the amount of Hong Kong dollars that Boston will receive in one year when converting its euro receivables into Hong Kong dollars. Do not round intermediate calculations. Round your answer to the nearest dollar.

Reference no: EM132708319

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