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What is the mxn cost in 180 days

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Reference no: EM133120754

As an importer of bicycles into Mexico from the United States, you have agreed to pay USD 500,000 in 180 days after you receive your bicycles. You face the following exchange rates and interest rates: spot rate, MXN 19/USD, 180-day forward rate MXN 19.50/USD, 180-day interest rate, 3% p.a., 180-day MXN interest rate, 8% p.a.

1. If you do forward hedge, what is the MXN cost in 180 days?

2. If you do money market hedge, what is the MXN cost in 180 days?

Reference no: EM133120754

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