1.) Illustrate the differences between the payments made on two different dates by calculating the required amount...
Question:
1.) Illustrate the differences between the payments made on two different dates by calculating the required amount of Mexican peso.2.) Specifically recommend one payment date which is considered a more economical option for Emma.
Emma plans to import a car from England on 1 March 2017. Confronting with two alternatives, she has been making a decision regarding which date that her payment should be made.The first option is to convert her Mexican peso into ?100,000 and make a payment on 1 March 2017, with the expectation that Mexican peso would appreciate by 1.5% from 1 January 2017 to 1 March 2017.The second option is to sign the 90-day forward contract on 1 March 2017 to pay ?100,000 to the British seller. The 90-day forward rate, quoted in terms of Mexican peso value of British pound, is expected to be 33.557.
Fundamentals of Taxation 2015
ISBN: 9781259293092
8th edition
Authors: Ana Cruz, Michael Deschamps, Frederick Niswander, Debra Prendergast, Dan Schisler, Jinhee Trone