(Related to Checkpoint 19.1 and Checkpoint 19.2) (Determining the percent-per-annum premium or discount) You are in need of Canadian dollars in six months, but before entering a forward contract to buy them, you would like to know their premium or discount the existing spot rate. Calculate the premium or discount from the existing spot rate for the 6-month Canadian dollar as of December 26, 2012 using the data given in the following table The from the existing Canadian dollar spot rate is % (Select from the drop-down menu and round to four decimal places) Data table Country/Currency Canada dollar 6-mos forward Japan yeni 6-mos forward Switzerland franc 6 mos forward UK pound 6-mos forward In US$ 0.9700 0.9689 0.010798 0.010803 0.9772 09783 16028 16008 Per USS 1.0309 1.0321 92 6097 92 5669 10233 10222 0 6239 06247 - X D

(Related to Checkpoint 19.1 and Checkpoint 19.2) (Determining the percent-per-annum premium or discount) You are in need of Canadian dollars in six months, but before entering a forward contract to buy them, you would like to know their premium or discount the existing spot rate. Calculate the premium or discount from the existing spot rate for the 6-month Canadian dollar as of December 26, 2012 using the data given in the following table The from the existing Canadian dollar spot rate is % (Select from the drop-down menu and round to four decimal places) Data table Country/Currency Canada dollar 6-mos forward Japan yeni 6-mos forward Switzerland franc 6 mos forward UK pound 6-mos forward In US$ 0.9700 0.9689 0.010798 0.010803 0.9772 09783 16028 16008 Per USS 1.0309 1.0321 92 6097 92 5669 10233 10222 0 6239 06247 - X D

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter20: Short-term Financing

Section: Chapter Questions

Problem 3IEE

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RXN's year-end is on December 31. On November 1, 2019 when the U.S. dollar was worth CDNS1.365, RXN sold merchandise to an American client for US$300,000. Full payment of this invoice was expected by March 1, 2020. On December 1, the spot rate was CDNS1.3450 and the three-month forward rate was CDNS1.3250. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a forward contract with its bank on December 1, 2019 to deliver US$300,000 in three months' time. The spot rate at year-end was CDNS1.36 and the forward rate from December 31, 2019 to March 1, 2020 was CDN$1.34. On March 1, 2020, RXN received the USS300,000 from its client and settled its contract with the bank. The forward contract was to be accounted for as a fair value hedge of the US dollar receivable. Significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates November 1, 2019 (Transaction date) US$1 = CDN$1.365 December 1, 2019 (Hedged date) December…
Use the following forward and spot prices for Canadian dollars (CS) to answer the question below. The prices are in U.S. dollars ($/C$). Forward rate for 4/15/20 Spot rate delivery of Canadian dollars $0.695 0.750 0.715 0.740 November 15, 2019 December 31, 2019 March 1, 2020 April 15, 2020 $695,000 Ⓒ$705,000 On November 15, 2019, a U.S. company takes delivery of merchandise costing C$1,000,000 from a Canadian supplier and records an account payable. On the same date, the company enters a forward contract locking in the U.S. dollar purchase price of C$1,000,000, for delivery on April 15, 2020. The forward contract is closed and payment is made to the supplier on April 15, 2020. The company's accounting year ends on December 31. Assuming the company still holds the merchandise at December 31, 2019, at what amount is the merchandise reported? $750,000x $0.705 0.765 Ⓒ$765,000 0.720 0.740
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(Related to Checkpoint 18.2) (Evaluating trade credit discounts) If a firm buys on trade credit terms of 5/15, net 90 and decides to forgo the trade credit discount and pay on the net day, what is the annualized cost of forgoing the discount (assume a 365-day year)? The annualized cost of the trade credit terms of 5/15, net 90 is %. (Round to two decimal places.)
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