Problem 10-7 (algorithmic) Question Help Krystal. Krystal is a US-based company that manufactures, sells, and installs water purification equipment On April 11, the company sold a system to the City of Ut Nagasaki, Japan, for installation in Nagasakl's famous Glover Gardens (where Puccini's Madame Butterfly waited for the return of Lt Pinkerton). The sale was priced in yen at 122.000.000, with payment due in three months. The exchange rate and interest rate data are shown in the popup window Note that the interest rate diterential vary slightly from the forward discounts on the yen because of time differences for the quotes. The spot 117.850/5, for example, is a mid-point range. On April 11, the spot yen traded in London from 1118 824/5 to 116 875/5. Krystal's Japanese competitors are currently borrowing yen from Japanese banks at a spread of two percentage points above the Japanese money rate. Krystal's weighted average cost of capitalis 16.5%, and the company wishes to protect the dollar value of this receivable W 3-month options are available from Kyushu Bank call option on 122,000,000 at exercise price of 117 0005 a 1.1% premium or a put option on 122,000,000, at exercise price of 117 000/5a 3.3% premium fren a. What are the costs and benefits of alternative hedges? Which would you recommend, and why? emfbWhat is the break-even reinvestment rate when comparing forward and money market alternatives? a. How much in US dollars will Krystal receive in 3 months without a hedge if the expected spot rate in 3 months is assumed to be V117 850/5? $ (Round to the nearest cent) 1 Data Table - X Que Spot exchange rate: V117 8505 (closing mid-ales) 1-month forward rate: 117.306/5. a 4.95% per annum premium 3 month forward 1115 505/5 a 462 per annum premium 1-year forward 1126175. a 4 65% per annum premium Click on the con located on the top-right comer of the datatable in order to COOYs contents into a spreadsheet Enter your answer in the answer box and then click Money Rates United States Japan Differential One month 49000 009500 4 BOSCOS Three months 4.95009 0 00025 485375% Twelve months 5.4500% 031375 5 13625 Click on the icon located on the top not comer of the datatable in order to copy its contents into spreadsheet 5 b parts ng Problem 10-7 (algorithmic) Question Help Krystal. Krystal is a US-based company that manufactures, sells, and installs water purification equipment On April 11, the company sold a system to the City of Ut Nagasaki, Japan, for installation in Nagasakl's famous Glover Gardens (where Puccini's Madame Butterfly waited for the return of Lt Pinkerton). The sale was priced in yen at 122.000.000, with payment due in three months. The exchange rate and interest rate data are shown in the popup window Note that the interest rate diterential vary slightly from the forward discounts on the yen because of time differences for the quotes. The spot 117.850/5, for example, is a mid-point range. On April 11, the spot yen traded in London from 1118 824/5 to 116 875/5. Krystal's Japanese competitors are currently borrowing yen from Japanese banks at a spread of two percentage points above the Japanese money rate. Krystal's weighted average cost of capitalis 16.5%, and the company wishes to protect the dollar value of this receivable W 3-month options are available from Kyushu Bank call option on 122,000,000 at exercise price of 117 0005 a 1.1% premium or a put option on 122,000,000, at exercise price of 117 000/5a 3.3% premium fren a. What are the costs and benefits of alternative hedges? Which would you recommend, and why? emfbWhat is the break-even reinvestment rate when comparing forward and money market alternatives? a. How much in US dollars will Krystal receive in 3 months without a hedge if the expected spot rate in 3 months is assumed to be V117 850/5? $ (Round to the nearest cent) 1 Data Table - X Que Spot exchange rate: V117 8505 (closing mid-ales) 1-month forward rate: 117.306/5. a 4.95% per annum premium 3 month forward 1115 505/5 a 462 per annum premium 1-year forward 1126175. a 4 65% per annum premium Click on the con located on the top-right comer of the datatable in order to COOYs contents into a spreadsheet Enter your answer in the answer box and then click Money Rates United States Japan Differential One month 49000 009500 4 BOSCOS Three months 4.95009 0 00025 485375% Twelve months 5.4500% 031375 5 13625 Click on the icon located on the top not comer of the datatable in order to copy its contents into spreadsheet 5 b parts ng