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Mauna Loa, a macadarnia nut subsidiary of Hersheys with plantations on the slopes of its...

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Finance

Mauna Loa, a macadarnia nut subsidiary of Hersheys with plantations on the slopes of its namesake volcano in Hilo. Hawaii. export Macadamia nuts woridwide. The Japanese market is its biggest export market, with average annual sales irmoiced in yen to lapancse customers of $1,200,000,000. At the present exchange rate of $122$ this is equivalent to $9,600,000. Sales are relatively equally distributed during the year. They show up as a $250,00,000 account receivable on Mauna Loa's balance sheet Credit terms to each customer alow for 60 diys before payment is due. Monthly cash collections are typically $100,000,000.
Mauna Loa would like to hedge its yen receipts, but it has too many customers and transactions to make it practical to sell each recervable forward. it does not want to use options because they are considered to be too expensine for this particular purpose. Therefore, they have decided to use a "matching" hedge by borrowing the ven.
Now much should Mauna Los borrow in yen?
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