If the firm uses the forward hedge

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Reference no: EM131915045

Intel, a US semiconductor manufacturer, has sold SGD 70 million worth of computer chips to a Singapore company. The payment (in SGD) is due in six (6) months.

Intel is given the following information:

Spot rate = SGD 1.32 / USD   

9-month forward rate = SGD 1.35 / USD

Interest rate in Singapore = 2% per year

Interest rate in U.S.A. = 3% per year

Intel’s own forecast suggests that the spot rate 6 months from now is most likely SGD 1.34 / USD.

If the firm uses the forward hedge, how much USD will it need in 6 months?

A. USD 51,852,000

B. USD 52,240,000

C. USD 53,030,000

D. USD 58,152,000

Reference no: EM131915045

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