How many francs does lee expect to receive on october first

Assignment Help Managerial Accounting

Reference no: EM13949712

Custom Shutters, Inc., manufactures plantation shutters according to customer order. The company has a reputation for producing excellent quality shutters that fit virtu- ally any size or shape of window. Sales are made in all 50 states. On July 1, Custom Shutters received orders from contractors in Switzerland and Japan. Lee Mills, presi- dent and co-owner of Custom Shutters, was delighted. The Swiss order is for shutters priced at $64,000. The order is due in Geneva on September 1, with payment due in full on October 1. The Japanese order is for shutters priced at $124,000. It is due in Tokyo on August 1, with payment due in full on October 1. Both orders are to be paid in the customer's currency. The Swiss customer has a reputation in the industry for late payment, and it could take as long as six months. Lee has never received payment in foreign currency before. He had his accountant prepare the following table of exchange rates:

Exchange Rate for $1	Swiss Franc	Yen
Spot rate	1.2360	117.70
30-Day forward rate	1.2450	117.68
90-Day forward rate	1.2590	117.70
180-Day forward rate	1.2708	117.66

Required

1. If the price of the shutters is set using the spot rate as of July 1, how many francs does Lee expect to receive on October 1? How many yen does he expect on October 1?

2. Using the number of francs and yen calculated in Requirement 1, how many dollars does Lee expect to receive on October 1? Will he receive that much? What is the value of hedging in this situation?

Reference no: EM13949712

Questions Cloud

Start a dvd rental program at his stores : Ray wants to start a DVD rental program at his stores that he plans to call Henry's DVD Club. He refers to each of his customers as "members."

What is the reliability of the computer : What is the reliability of the computer? A backup computer identical to the one being used will be installed to improve overall reliability. Assuming the new computer automatically functions if the main one fails, determine the resulting reliabili..

How can we say that price equals to the present value : How can we say that price equals to the present value of all future cash flows when many actual investors may be seeking capital gains and planning to hold their shares for only a year or two? Explain.

Write a routine miscellaneous memo requesting action : Directions: Write a work memo as described: Think of an idea you would like to see implemented in your job (e.g., a way to increase productivity, improve service, increase business, or improve working conditions.) Write a routine miscellaneous memo r..

How many francs does lee expect to receive on october first : If the price of the shutters is set using the spot rate as of July 1, how many francs does Lee expect to receive on October 1? How many yen does he expect on October 1?

Mass flow rate of the co2 : Determine (a) the mass flow rate of the CO2, in kg/s, and (b) the mass flow rate of the cooling water, in kg/s.

What information should the proposed system : What information should the proposed system exchange between the retail stores and headquarters?

Convert the order year into a decade and count the orders : Using the database attached to Lecture 2, let's say you are interested (let's say as the business owner) to see how old the books are that people order (going by their publication date).

Two-phase liquid-vapor mixture : Fix the state at the turbine exit: If the state is superheated vapor, determine the temperature, in 8F. If the state is a two-phase liquid-vapor mixture, determine the quality.

User Account

All Pages