User Account

All Pages

How much would the company lose by not hedging

Assignment Help Accounting Basics
Reference no: EM133109213

Question - Sunland Corp. has just made a sale to a British customer. The sale was for a total value of £147,000 and is to be paid 60 days from now. Sunland management is concerned that the British pound will depreciate against the U.S. dollar and plans to hedge this risk. The company's bank informs management that the spot rate is $1.2625/£ and the 60-day forward rate is $1.2525/£.

Required -

1. If Sunland sells its pounds receivable at the forward rate, what is the dollar value of its receivables?

2. If it did not enter into a forward contract and the spot rate 60 days later is $1.2325/£, how much would the company lose by not hedging?

Reference no: EM133109213

Questions Cloud

Why would one be interested in learning cultural diversity : Why would one be interested in learning cultural Diversity, oppression, and change culturally grounded social work? and if so what would interest them the most?
What work environment and life preferences : What work environment and life preferences are most important to you? In what ways might these preferences affect your career decision making?
Analyse bob using maslow hierarchy of need : Analyse Bob using maslow's hierarchy of need. Analyse Bob's lack of motivation using equity theory and expectancy theory.
Create an employment contract under common law : 1. Which of the following are necessary to create an employment contract under common law?
How much would the company lose by not hedging : If it did not enter into a forward contract and the spot rate 60 days later is $1.2325/£, how much would the company lose by not hedging
How the current healthcare financing system is affecting : Analyze how the current healthcare financing system is affecting access to basic healthcare services, quality of care, and well-being of the nation.
Lawsuit touching on public relations in kenya : Discuss the problems/ challenges that may have caused this.
Implementing a reward strategy : According to CIPD 2005 what are the four steps to implementing a reward strategy?
Why greek smes adopt a less strategic approach : Task: Read the article 'Weathering the storm: Talent management in internationally oriented Greek small and medium-sized enterprises' located on Moodle.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd