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What would kansas is net dollar cost for the payable

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Kansas corporation an American company has a payment of €6.4 million Due to Tuscany Corp. one year from today. At the prevailing spot rate of 0.90 €/$ this would cost Kansas $7,111,111 but Kansas faces the rest that the euro/ dollar rate would fall in the coming year so that it will end up paying a higher amount and dollar terms to hedge this risk Cancers has to possible strategies. Strategy one is to buy €6.4 million forward today at a one-year forward rate of 0.89 €/$. Strategy to use to pay a premium of $114,000 for a one year core option one €6.4 million and exchange rate of 0.88 €/$

Problem A. Suppose that In one year despite exchange rate is 0.85 €/. What would be Kansas is net dollar cost for the payable under each strategy? Round your answer to the nearest whole dollar amount

Problem B. Suppose that in one year despite exchange rate is 0.95 €/. What would Kansas is net dollar cost for the payable under each strategy? Round your answer to the nearest whole dollar amount

Reference no: EM132918857

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