Question
In: Accounting
Gotohell buys and sells regularly with customers worldwide. Its home currency is the dollar. The firm...
Gotohell buys and sells regularly with customers worldwide. Its home currency is the dollar. The firm expects to receive €1.2 million in 6 months’ time from a customer abroad.
Current exchange rates in the home country of Gotohell are:
Exchange rate : Euros Per dollar
Spot : 4.1780-4.2080
6-month forward : 4.2302- 4.2606
12-month forward : 4.2825-4.3132
Required:
a) Calculate the rate of forward discount of the euro on the 6-month forward exchange rate both for buying and selling rate.
b) If the interest rate in the home country of Gotohell is 4% per year, calculate the implied annual interest rate in the foreign customer’s country, using the mid-spot and the mid-twelve-month forward exchange rate.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Gotohell buys and sells regularly with customers worldwide. Its home currency is the dollar. The firm...
Gotohell buys and sells regularly with customers worldwide. Its
home currency is the dollar. The firm expects to receive €1.2
million in 6 months’ time from a customer abroad.
Current exchange rates in the home country of Gotohell are:
Exchange rate : Euros Per dollar
Spot : 4.1780-4.2080
6-month forward : 4.2302- 4.2606
12-month forward : 4.2825-4.3132
Required: a) Calculate the rate of forward discount of the euro
on the 6-month forward exchange rate both for buying and selling
rate....
A grocery store buys Italian gelato from different suppliers and sells the desserts to its customers...
A grocery store buys Italian gelato from different suppliers and
sells the desserts to its customers for $5 per pint. In September,
the following purchases and sales occurred. You are to find the
COGS, ending inventory and Gross Margin using FIFO and LIFO.
September 2, purchase 30 pints at $2.50 each
September 6, purchase 20 pints at $3 each
September 20, purchase 25 pints at $4 each
September 5-8, sell 10 pints to customers
September 9-19, sell 20 pints
September...
Why does most interbank currency trading worldwide involve the U.S. dollar? Explain in detail and provide...
Why does most interbank currency trading worldwide involve the
U.S. dollar? Explain in detail and provide an example. How have the
current financial problems in the U.S. affected interbank trading,
if any?
A firm currently sells its product with a 2% discount to customers who pay by cash...
A firm currently sells its product with a 2% discount to
customers who pay by cash or credit card when they purchase one of
the firm's products; otherwise, the full price is due within 30
days. Forty percent (40%) of customers take advantage of the
discount. The firm plans to drop the discount so the new terms will
simply be net 30. In doing so it expects to sell 100 fewer units
per month and all customers to pay at...
Sampling Distribution of Proportions A restaurant chain regularly surveys its customers. On the basis of these...
Sampling Distribution of Proportions A restaurant chain
regularly surveys its customers. On the basis of these surveys, the
management of the chain claims that 75% of its customers rate the
food as excellent. A consumer testing service wants to examine this
claim. They take a simple random sample of 600 customers and ask
them each to rate the food. Assume that the restaurant chain’s
claim is true (i.e. that the true proportion is indeed 0.75).
a) assuming that the chain’s...
Assume the country of Sluban ties its currency (the slu) to the dollar and the exchange...
Assume the country of Sluban ties its currency (the slu) to the
dollar and the exchange rate will remain fixed. Sluban has frequent
trade with countries in the eurozone and the United States. All
traded products can easily be produced by all the countries, and
the demand for these products in any country is very sen- sitive to
the price because consumers can shift to wherever the products are
relatively cheap. Assume that the euro depreciates substantially
against the dollar...
1. A U.S. company sells to customers in Canada and buys from suppliers in Singapore. At...
1. A U.S. company sells to customers in Canada and buys from
suppliers in Singapore. At December 31, 2019, the company’s
year-end, the following items are reported on its balance
sheet:
Accounts receivable (C$2,500,000)..…………………… $2,125,000
Accounts payable(S$1,400,000)………………………….. 1,061,200
On January 22, 2020, when the spot rate is $0.845/C$, the
company collects C$1,000,000 from customers. It collects the
remaining C$1,500,000 on February 16, 2020, when the spot rate is
$0.856. On February 23, 2020, when the spot rate is $0.762, the...
Lilliput, a one-product mail-order firm, buys its product for $55 per unit and sells it for...
Lilliput, a one-product mail-order firm, buys its product for
$55 per unit and sells it for $153 per unit. The sales staff
receives a 10% commission on the sale of each unit. Its December
income statement follows.
LILLIPUT COMPANY
Income Statement
For The Month Ended December 31, 2011
Sales
$
1,530,000
Cost of goods
sold
550,000
Gross profit
980,000
Expenses
Sales commissions (10%)
153,000
Advertising
246,000
Store rent
26,300
Administrative salaries
51,500
Depreciation
61,500
Other expenses
14,300
...
A firm sells its product to two groups of customers. Demand from group 1 is Q1...
A firm sells its product to two groups of customers. Demand from
group 1 is Q1 = 100, 000− 5,000P and demand from group 2 is Q2 =
140,000 − 10,000P.
a) Find the total demand that the firm faces for its product.
Explain it first using pictures, and then do the algebra. Write
your answer of the total demand as quantity as a function of price.
(Hint: draw pictures. Then add the two demands horizontally; that
is, at each...
A firm sells a currency future contract, and then decides before the settlement date that it...
A firm sells a currency future contract, and then decides before
the settlement date that it no longer wants to maintain such a
position. It can close out its position by:
A. Purchasing a put option contract in the same currency.
B. Buying a futures contract with a different settlement
date.
C. Buying an identical futures contract.
D. Selling a futures contract for a different amount of
currency.
E. Selling an identical futures contract.
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- PUT IN JAVA PROGRAMMING The StockB class: Design a class named StockB that contains the following...
- Draw a DFA for the following ( ∑ = {0,1}): Set of all strings with.
- In the article from Forbes notes that the goal of a leader is not to clone...
- Many people keep time using a 24 hour clock (11 is 11am and 23 is 11pm,...
- UNIX ONLY -- DIFFICULT LAB ASSIGNMENT This is an extremely difficult subject for me. Could you...
- Do you know why your credit card can be refused even though you are profitable?
- The Following Java expression: S/10 * 10 + 10 – S = C Show that this...
ADVERTISEMENT