Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. an american firm is owed a$2,000,000.00 payable in

An American firm is owed A$2,000,000.00 payable in one year. The current spot it $1.7500/A$....

90.2K

Verified Solution

Question

Accounting

An American firm is owed A$2,000,000.00 payable in one year. The current spot it $1.7500/A$. An Australian bank is paying 3.50% on deposits or will lend at 4.50%. A U.S. bank is paying 4.50% or will lend at 8.50%. The firm will hedge this exposure with money market hedging. How much will they get in one year?

(a) $3,349,282.30 (b) $3,500,000.00 (c) $3,797,500.00 (d) $3,633,971.30

The answer is (b) $3,500,000.00, need help with the math.

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

Consider the following in Euclidean geometry: Suppose that you want to translate a figure in the...

Basic Math
Q

Show that at every point on the curve r(t) = <(e^(t)*cos(t)), (e^(t)*sin(t)), e^t> the angle between the...

Basic Math
Q

A. Describe parasympathetic and sympathetic neurons, taking into account the relative lengths of the fibers, neurotransmitters involved,...

Medical Sciences
Q

1a. According to the Wernicke-Litchheim-Geschwind model, individuals with damage to the left inferior frontal lobe tend...

Psychology
Q

3 In this family segregates alcaptonuria what is the most probable mendelian transmission a What...

Biology
Q

Why do islands tend to have unique species found no where else mutation rates are...

Biology
Q

23 A capacitor C 2 F and an inductor with L 10 E and coil...

Physics
Q

MP bisects segment LN at midpoint M Based on the definition of angle bisector and...

Geometry
Q

the Democratic candidate Let X be the number of people who prefer the candidate when...

Basic Math
Q

Cleveland Cruisers, a local river-boat touring company, is considering the implementation a new hand-held cash...

Accounting
Q

If the cash method of accounting is used rather than the accrual method, which of...

Accounting
Q

Saint Louis Universal Co. has a capital structure with 30% debt (basically long-term debt) and...

Finance