Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Middlebury Herbal Products, a United Kingdom based multi-national corporation, is a producer of herbal teas, seasonings, and medicines. Their products are marketed in the United Kingdom and in many parts of continental Europe. Middlebury generally invoices in British pound sterling when it sells to foreign customers in order to guard against adverse exchange rate changes. Nevertheless, it has just received an order from a large wholesaler in France for 320,000 pounds sterling of its products, conditional upon delivery being made in 3 months’ time and the order invoiced in euros. Middlebury’s controller, Elton Peters, is concerned with whether the pound will appreciate against the euro over the next 3 months, thus eliminating all or most of the profit when the euro receivable is paid. He thinks this an unlikely possibility, but he decides to contact the firm’s banker for suggestions about hedging the exchange rate exposure. Mr. Peters learns from the banker that the current spot exchange rate in euro/pounds is 1.5641; thus the invoice amount should be 500,512 euro. Mr. Peters also learns that the three-month forward rates for the pound and the euro versus the US dollar are $1.5019/pound sterling and $0.9699/euro, respectively. The bank does not provide forward contracts where euro is directly traded for sterling or sterling for euro.However, the banker offers to set up a forward hedge for Mr. Peters. Mr. Peters also observes the following: Euro United Kingdom 3-month borrowing rate 2% 3.75% 3-month deposit rate 1.5% 3.25%
If Middlebury uses a forward hedge, how many pounds sterling will it receive in 3 months?
If Middlebury uses a money market hedge, how many pounds sterling will it receive in 3 months?
Quigley Inc. is considering two financial plans for the coming year. Management expects sales to be $300,000, operating costs to be $265,000, assets (which is equal to its total invested capital) to be $200,000, and its tax rate to be 35%. Assuming t..
Ralph buys perpetuity immediate paying 60 annually. He deposits the payments into a savings account earning interest at an annual effective rate of 4%. Fifteen years later, after receiving the 15th payment, Ralph sells the perpetuity based on an effe..
You are evaluating two different silicon wafer milling machines. The Techron I costs $258,000, has a three-year life, and has pretax operating costs of $69,000 per year. If your tax rate is 35 percent and your discount rate is 9 percent, compute the ..
Total costs were $73,100 when 30,000 units were produced and $96,500 when 36,000 units were produced. Use the high-low method to find the estimated total costs for production level of 32,000 Units. Please show work
Consider a $4,900 deposit earning 8 percent interest per year for 8 years. What is the future value? How much total interest is earned on the original deposit? How much is interest earned on interest?
Project K costs $70,000, its expected inflows are $16,000 per year for 8 years, and its WACC is 13%. What is the project's discounted payback?
Payment dates. Determine when a firm must pay for purchases made and invoices dated on November 25 under each of the following credit terms
Louise Manufacturing uses 2,600 switch assemblies per week and then reorders another 2,600. The relevant carrying cost per switch assembly is $10.50, and the fixed order cost is $1,300. What are the current carrying costs? Calculate the economic orde..
If the prevailing interest rate is 3%, would you accept this project if you were offered an upfront payment of $10 to do so?
What are the portfolio weights for a portfolio that has 152 shares of Stock A that sell for $30 per share and 120 shares of Stock B that sell for $20 per share? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g.,..
Free Cash Flow You are considering an investment in Crew Cut, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Crew Cut earned an EBIT of $23.05 million, paid taxes of $3.95 million, and its depreciation ex..
A Treasury bond has a face value of $10,000 and is currently priced at $10,165.33. The bond has a current yield of 6.276 percent. What is the coupon rate on a $10,000 bond? Hi-Tek plans to pay a $6 per share dividend one year from today, and will inc..
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd