FREE Trial

Technocorp has purchased industrial parts from a German company for a total cost of 1,225,000. The firm has 30 days

Question:

Technocorp has purchased industrial parts from a German company for a total cost of €1,225,000. The firm has 30 days to pay. A bank has given Technocorp a 30-day forward quote of $1.355/€. Assume that on the day the payment is due, the spot rate is $1.368/€. How much would Technocorp have saved by hedging with a forward contract?

This problem has been solved!


Do you need an answer to a question different from the above? Ask your question!

Step by Step Answer:

Answer rating: 90% (10 reviews)

Foreign currency payable 1 225 000 Spot exchange …View the full answer


answer-question
Answered By
tutor-profile-image
Ehsan Mahmood
I’ve earned Masters Degree in Business Studies and specialized in Accounts & Finance. Couple with this, I have earned BS Sociology from renowned institute of Pakistan. Moreover, I have humongous teaching experience at Graduate and Post-graduate level to Business and humanities students along with more than 7 years of teaching experience to my foreign students Online. I’m also professional writer and write for numerous academic journals pertaining to educational institutes periodically.
4.90+ 248+ Reviews 287+ Question Solved
Related Book For  answer-question
Fundamentals of Corporate Finance

Fundamentals of Corporate Finance

ISBN: 978-1118845899

3rd edition

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

See More Books
View Solution
Create a free account to access the answer
Cannot find your solution?
Post a FREE question now and get an answer within minutes. * Average response time.
Question Posted: October 19, 2016 10:20:43
See More Questions

Students also viewed these Corporate Finance questions

Q:
Assume that your parents wanted to have $160,000 saved for college by your eighteenth birthday and they started saving on your first birthday. They saved the same amount each year on your birthday...
A:
a 0 1 2 3 18 C C C C First we need to calculate the PV of 160 000 in 18 years N I Y PV PMT FV Excel......
Q:
The Tower family wants to make a home improvement that is expected to cost $60,000. They want to fund as much of the cost as possible with a home equity loan but can afford payments of only $600 per...
A:
Loan PVA PMT PVFA k n 600 PVFA 1 1......
Q:
a. Draw time lines for (1) a $100 lump sum cash flow at the end of Year 2, (2) an ordinary annuity of $100 per year for 3 years, and (3) an uneven cash flow stream of -$50, $100, $75, and $50 at the...
A:
You have applied for a job with a local bank As part of its evaluation process you must take an examination on time value of money analysis covering the following questions a A time line is a graphica......
Q:
In Exercises 7681, find the domain of each function. g(x) = 4 x - 7
A:
The denomi......
Q:
1. What were Bakers intentions in the conversation with Rennalls? Were they fulfilled or not, and why? 2. Was Baker alert to nonverbal signals? What did both Baker and Rennalls communicate to one...
A:
1 Baker appeared to have the intention of motivating Matthew Rennalls to do a good job as his replacement and to provide him with some pointers that would enhance his probability of success These goal......
Q:
At the beginning of the year (January 1), Buffalo Drilling has $10,000 of common stock outstanding and retained earnings of $7,200. During the year, Buffalo reports net income of $7,500 and pays...
A:
Buffalo Drilling Statement of Stockholders Equity Comm......
Q:
Did you work Exercise 6.1, IV? If not, work it now. Then take the symbolized compound statements you created for this exercise and construct a truth table for each. Finally, categorize each statement...
A:
I ll create symbolized compound propositions for each of the five topics listed in Exercise IV Section 6 1 and then construct a truth table for each o......
Q:
In late 1980, the U.S. Commerce Department released new data showing inflation was 15%. At the time, the prime rate of interest was 21%, a record high. However, many investors expected the new Reagan...
A:
a The average rate of inflation for the 5 year period is calculated as 0 13 0 09 0 07 0 06 0 06 5 8......
Q:
Internet security is a concern for many people. In this discussion, you will consider perceived causes for concern and the steps people take to keep themselves safe when using the Internet....
A:
Solution Public concerns with internet security According to a 2022 survey by the National Telecommunications and Information Administration NTIA 84 of online households in the United States have at l......
Q:
A manufactured component has its quality graded on its performance, appearance, and cost. Each of these three characteristics is graded as either pass or fail. There is a probability old.40 that a...
A:
a Let E be the event that the component passes on performance let A be the event th......
Q:
A bank in India has offered a spot rate quote on Indian rupees (Rs) of Rs62.2905/$. The Indian rupee is quoted at a 30-day forward premium of 5.22 percent against the dollar. What is the 30-day...
A:
Spot rate Rs 62 2905 30 day forward premium on the do......
Q:
Tass Co., Ltd, a Japanese electrical parts producer, is considering building a plant in the U.S. The cost of this plant will be $20 million and the current spot exchange rate between the yen and the...
A:
Expected cash flows to Tass in yen can be calculated by mul......
Q:
What is contingency planning? Explain.
A:
Contingency planning is thinking in adva......
Q:
Rushmore Company provided services for $37,500 cash during Year 1. Rushmore incurred $27,000 in expenses on account during Year 1, and by the end of the year, $10,500 of that amount had been paid...
A:
Solution Given Total revenue 37 500 services provided for cash To......
Q:
Nurses at a hospital monitor patient blood glucose levels and give insulin so that the levels are within a range. Based on medical evidence, the USL was set to be 130 (before meals) and a LSL of 90....
A:
To calculate the process capability ratio Cp you will need the values you ve a......
Q:
In making a preliminary estimate of a chemical processing plant, several major types of equipment are the most significant parameters in affecting the installation cost. The cost of piping and other...
A:
To determine the total preliminary cost estimate of the plant including the building and equipment w......
Q:
Making is one of a leader's most important tasks. Followers look to leaders to help them interpret the meaning ofto make sense ofmergers, acquisitions, market corrections, new competitors and...
A:
1 What is the major organizational change How is this development being framed Are there competing frames and who is offering them Let s consider a major organizational change related to post COVID po......
Q:
The table below shows the sales of widgets (in units) over the past 5 years. Using exponential smoothing with a smoothing constant of 0.2, what is the forecast for next year? The initial forecast...
A:
To forecast the sales for next year using exponential smoothing with a smoothing constant of 0......
Q:
Mr. Bayfront has a listing to sell a townhouse. When sold, his commission will equal 3% of the selling price. These townhouses sell quickly when they are priced at $120,000, but it can take months of...
A:
a Yes the realtor has a conflict of interest b If the townhome sells for 120 000 the realtors commis......
Q:
Define a traverse in Surveying?
A:
The detailed......
MCAT Physics And Math Review Online Book 2021-2022 2021 Edition - ISBN: 1506262341 - Free Book