17-13 SPOT AND FORWARD RATES Anderson Australian Imports has agreed to purchase

Question

17-13 SPOT AND FORWARD RATES Anderson Australian Imports has agreed to purchase cases of Australian wine for 4 million Australian dollars at today's spot rate. The inancial manager, Linda Wilson, has noted the following current spot and forward rates: firm's Spot 30-day forward 90-day forward 180-day forward U.S. Dollar Australian Dollar 0.9426 0.9404 0.9365 0.9309 Australian Dollar/ U.S. Dollar 1.0609 1.0634 1.0678 o3 1.0742 On the same day, Wilson agrees to purchase 15,000 more cases of wine in 3 months at the same price of 4 million Australian dollars a. What is the price of the wine in U.S. dollars if it is purchased at today's spot rate? b. What is the cost in US. dollars of the second 15,000 cases if payment is made in 90 days and the spot rate at that time equals today's 90-day forward rate? If the exchange rate for the Australian dollar is 1.03 to $1 in 90 days, how much will Wilson have to pay for the wine (in U.S. dollars)? c.

Explanation / Answer

a Price of Wine - 4000000/1.0609 $ 3770384 b If Spot Rate is 1.0678, price to be paid 4000000/1.0678 $ 3746020 c If Spot rate is 1.03 4000000/1.03 $ 3883495

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.