Money market hedge on payables

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Money Market Hedge on Payables

Use the following information to calculate the dollar cost of using a money market hedge to hedge 200,000 pounds of payables due in 180 days. Assume the firm has no excess cash. Assume the spot rate of the pound is $1.52, the 180- day forward rate is $1.50. The British interest rate is 5%, and the U.S. interest rate is 4% over the 180-day period.

Reference no: EM131529687

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