Question: can i have the answer for a,b,c,d and e P&G India. Procter and Gamble's affiliate in India, P&G India, procures much of its toiletries product


can i have the answer for a,b,c,d and e
P&G India. Procter and Gamble's affiliate in India, P&G India, procures much of its toiletries product line from a Japanese company. Because of the shortage of working capital in India, payment terms by Indian importers are typically 180 days or longer. P&G India wishes to hedge an 8.5 million Japanese yen payable. Although options are not available on the Indian rupee (Rs), forward rates are available against the yen. Additionally, a common practice in India is for companies like P&G India to work with a currency agent who will, in this case, lock in the current spot exchange rate in exchange for a 4.69% fee. Using the exchange rate and interest rate data in the popup window, E, compare alternate ways below that P&G India might deal with its foreign exchange exposure. Assume a 360-day financial year. a. How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.51193/Rs? 2.4346/Rs? 2.5951/Rs? b. How much in Indian rupees will P&G India pay in 180 days with a forward market hedge? c. How much in Indian rupees will P&G India pay in 180 days with a money market hedge? d. How much in Indian rupees will P&G India pay in 180 days with a currency agent hedge? e. What do you recommend? - a. How much in Indian rupees will P&G India pay in 180 days without a hedge if the expected spot rate in 180 days is assumed to be 2.51193/Rs? Rs (Round to the nearest whole number.) Data table Spot rate 180-day forward rate Expected spot, 180 days 180-day Indian rupee investing rate 180-day Japanese yen investing rate Currency agent's exchange rate fee P&G India's cost of capital 2.51193/Rs 2.4346/Rs 2.5951/Rs 7.54% 3.36% 4.69% 12.53%
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
