What is the net impact of cpa company net income

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Reference no: EM133010740

On November 01, 2019, CPA Company forecasts the purchase of raw materials from a foreign supplier on February 1, 2020, at a price of 200,000 foreign currencies. On November 01, 2019, CPA pays Php1,500 for a 3-month call option on 200,000 FC with a strike price of Php0.40 per FC transaction. On December 31, 2019 the option has a fair value of Php 1,100. The following Spot Rates Apply.

Dates                    Php per FC
11/01/2019          Php0.40
12/31/2019          0.38
02/01/2020             0.41

Problem 1: What is the net impact of CPA company's 2020 net income as a result of hedge of a forecasted foreign currency purchase?

Reference no: EM133010740

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