Arvin Australian Imports has agreed to purchase 15,000cases of Australian wine for 4 million Australian dollars at

Question:

Arvin Australian Imports has agreed to purchase 15,000cases of Australian wine for 4 million Australian dollars at today€™s spot rate. The firm€™s financial manager, Sarah Vintnor, has notedthe following current spot and forward rates:

Australian Dollar/ U.S. Dollar U.S. Dollar/ Australian Dollar 0.7930 1.2610 Spot 30-day forward 90-day forward 180-day f
On the same day, Vintnor 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 U.S. 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?

c. If the exchange rate for the Australian dollar is 1.20 to $1 in 90 days, how much will Vintnor have to pay for the wine (in U.S. dollars)?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...

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