Covington Industries just sold equipment to a Mexican firm. Payment of 11,315,000 Mexican pesos (MP) will be
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Covington Industries just sold equipment to a Mexican firm. Payment of 11,315,000 Mexican pesos (MP) will be due to Covington in 30 days. Covington has the option of selling the pesos today at a 30-day forward rate of $0.05139/MP. If it waits 30 days to sell the pesos, the expected spot rate is $0.04881/MP. In dollars, how much better off is Covington by selling the pesos in the forward market?
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1119371403
4th edition
Authors: Robert Parrino, David S. Kidwell, Thomas Bates
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