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P & G India. Proctor and Gambles's affiliate in India, P& G India, procures much of its toiletries product line from aJapanese company. Because of the shortage of working capital inIndia, payment terms by India, payment terms by Indian importersare typically 180 days or longer. P & G India wishes to hedgean 8.5 million Japanese yen payable. Although options are notavailable against the yen. Additionally, a common practice in Indiais for companies like P&G India to work with a currency agentwho will, in this case, lock in the current spot exchange rate inexchange for a 4.85% fee. Using the following exchange rate andinterest rate data, recommend a hedging strategy.
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