Question: 11. From the given data, What is the fair value of the forward contract on January 31, 2020? ARABICA Company sold coffee for 5,000,000 Yen

11. From the given data, What is the fair value of the forward contract on January 31, 2020?

ARABICA Company sold coffee for 5,000,000 Yen to a customer in Japan on November 2, 2019. Collection in Japanese Yan was due on January 31, 2020. On the same date, to hedge this foreign currency exposure, ARABICA Company entered into a forward contract to sell 5,000,000 Yen to Export Bank for delivery on January 31, 2020. Indirect exchange rates on different dates were as follows: Nov 2 Dec 31 Jan 31 Spot rate 2.00 2.10 2.15 30-day forward rate 2 25 2.50 2.60 60-day forward rate 2.35 2.63 2.75 90-day forward rate 2.40 2.75 2.85On January 1, 2025, Nathan Co paid P6,00Q cash to acquire a put foreign exchange option for FC37,500 which expires at the end of the year. The option hedges the 2025 forecasted sales of FC37,500. Nathan's fiscal year ends every October 31. 1/1/25 10/31/25 12/31/25 Spot rate (market price) P1.45 P1.20 P1.30 Strike price (exercise price) 1.40 1.40 1.40 Fair value of put option 6,000 25 250 Determine the intrinsic value at inception of the option contract

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