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What is the estimated dollar cash inflows of patton

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Question - Assume that Patton Co. will receive 100,000 New Zealand dollars (NZ$) in 60 days. Today's spot rate of NZ$ is $.52. A put option on NZ$ exists with an exercise price of $.54, a premium of $.02, and a 60-day expiration date. The forecasted spot rate of the NZ$ in 60 days is $0.50 with a probability of 20%, $0.53 with a probability of 40%, and $0.55 with a probability of 40%. What is the estimated dollar cash inflows of Patton if it uses the put option hedge?

Reference no: EM132969723

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