Question: It is now September 14th 2012 and it is time to make the payment to Koala, Inc. The spot rate on 9/14/2012 for AD is

It is now September 14th 2012 and it is time to make the payment to Koala, Inc.

The spot rate on 9/14/2012 for AD is 1.0561. The exchange rate on 9/7/12 was 1.039

a. Compute the US dollar value of your $ 1,180,000,000 Australian dollar payment due using the current spot (exchange) rate on September 14th 2012.

When compared to the September 7th exchange rate prevailing at that time, how much did the due payment increase or decrease in value (in US dollars) since September 7th 2012? By what percentage?

b. In US dollars, what is your dollar gain or loss on your futures contract position since September 7th 2012? Assume you have "tailed the hedge" in exercise 4.

c. Combining the change in payment due with the gain/loss on the futures position, what is the net total US dollar increase or decrease in payment due since September 7th 2012?

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