Question: A U . S . - based multinational corporation ( MNC ) purchased equipment from a British firm today and must pay them 1 ,

A U

.

. -

based multinational corporation

(

MNC

)

purchased equipment from a British firm today and must pay them

1, 000, 000

one month from today. The MNC is certain the spot rate will be $

1.10 /

one month from today. The current forward rate is $

1.05 / .

Should the MNC wait one month to buy the pounds using a forward contract? Explain what steps you would take today and one month from today. Why did you choose this course of action? What is the cost of the equipment in terms of dollars?

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