Please show the working Boeing, a U.S. corporation, just signed a contract to sell...
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Boeing, a U.S. corporation, just signed a contract to sell a Boeing 737 aircraft to Air France. Air France will be billed 20 million due in one year. The current spot exchange rate is $1.05/ and the one-year forward rate is $1.10/. The annual interest rate is 6.0% in the US, and 5.0% in France. Boeing is concerned with the volatile exchange rate between the dollar and the euro and would like to hedge exchange exposure. (a) It is considering two hedging alternatives: sell forward the euro proceeds from the sale or borrow euros from the Credit Lyonnaise against the euro receivable. Which alternative would you recommend? Why? 4 Marks) 5 (b) Other things being equal, at what forward exchange rate would Boeing be indifferent between the two hedging methods
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