What should you do - calculate the cost of each option

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Reference no: EM133633056

Question: Suppose the USD/Euro spot rate is USD 1.06 = EUR 1.00 and that the one month forward rate is USD 1.02 = EUR 1.00. You have just entered into a contract to import 20 Lamborghini Diablos to sell at your exotic car dealership. The manufacturer offers a deal to give you a 2% discount on the cars if you pay within 10 days. Otherwise, you will have to transfer funds at the end of 30 days. Each car sells for 500,000 Euros. What should you do? Make sure that you calculate the cost of each option.

Reference no: EM133633056

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