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Hilton Co. is expecting to receive 800,000 New Zealand dollars in one year. Hilton expects...

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Finance

Hilton Co. is expecting to receive 800,000 New Zealand dollars in one year. Hilton expects the spot rate of New Zealand dollar to be $0.70 in a year, so it decides to avoid exchange rate risk by hedging its receivables. The spot rate of the New Zealand dollar is quoted at $0.80. The one-year forward rate exhibits a 10% discount. How does Hilton Co. use forward contracts to hedge the exchange rate risk for the 800, 0 New Zealand dollars receivables and how many U.S. dollars Hilton Co. will receive?

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