Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. 16. us.-based cleveland tool company has received

16. US.-based Cleveland Tool Company has received an order from a Mexican manufacturing company for...

60.1K

Verified Solution

Question

Finance

16. US.-based Cleveland Tool Company has received an order from a Mexican manufacturing company for machinery worth MP1,000,000. The export sale would be denominated in Mexican pesos on a one-year open account basis (hint: this is a receivable for Cleveland Tool). Cleveland Tool faces the following market conditions: The current spot rate is MP12/$ MP13/$ The one-year forward rate is 5/$ MP13.5/$ Cleveland Tools ($) WACC is 10% p.a. Cleveland Tool can borrow pesos in Mexico at 8% per annum or invest pesos in Mexico at 7% per annum.

17. If Cleveland Tool Company hedges in the forward market, what will be its dollar proceeds one year from now?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

You are discussing your 401(k) with Dan Ervin when he mentions that Sarah Brown, a representative...

Finance
Q

A woman with average height, and type A- blood, and a man with type B+ blood...

Medical Sciences
Q

Jane is a 69-year-old black, married, retired female who lives with her husband. She was referred...

Psychology
Q

Using excel UserForm construct a Flowchart that solves a quadratic equation ax^2+bx+c=0 for changingvalues of a, b and...

Mechanical Engineering
Q

The Project for Health, Wellness, and Self-Care focus on your self-awareness and reflection to identify your...

Psychology
Q

2 pairs a food molecule with its building block Row 1 2 3 4 Food...

Biology
Q

factor tables included Question 4 of 14

Accounting
Q

On July 1,2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange...

Accounting
Q

The following information for the year ended December 31, 2021, was reported by Nice Bite,...

Accounting
Q

Vinson llc uses variable costing and absorption costing. If he sells fewer units, absorption costing...

Accounting
Q

What is this project's payback period if initial capital investment is $7,500? 3 years...

Accounting
Q

E8.11 (LO 3) The following information pertains to Crane Video Company 1. Cash balance per...

Accounting