westcengagenow.com/ilrr/takeAssignment/takeAssignmentMain.do eBook Problem 19-13

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westcengagenow.com/ilrr/takeAssignment/takeAssignmentMain.do eBook Problem 19-13 Spot and forward rates Anderson Australian Imports has agreed to purchase 10,000 cases of Australian beer for 4 million Australian dollars at today's spot rate. The firm's financiall manager, Linda Wilson, has noted the following current spot and forward rates: U.S. Dollar/Australian Australian Dollar/Us Spot 30-day forward 90-day forward 180-day forward On the same dary, Wilson agrees to purchase 10,000 more cases of beer in 3 months at the same price of 4 milion Australian dollars Dollar 1.0750 1.0715 1.0630 0.8799 Dollar 0.9302 .9333 0.9407 1.1365 a. What is the price of the beer in U.S. doillars if it is purchased at today's spot rate? Round your answer to the nearest cent. b. What is the cost in U.S. dolars of the second 10,000 cases if payment is made in 90 days and the spot rate at that time equals today's 90-day forward rate? Round your answer to the nearest cent. c. If the exchange rate for the Australilan dollar is 0.9197 to $1 in 90 days, how much will wilson have to pay for the beer (in U.S. dollars)? Round your answer to the nearest cent. Check My Work (s remaining) Problem 19.13 Question S ot 10 a SaveExit Submit Assignment for Grading

Explanation / Answer

a. Price of the beer in U.S. dollars if purchased at spot rate:

1 Australian Dollar = 1.0750 US $

4 million Australian Dollars x 1.0750 = $4,300,000

b. Cost in US dollars after 90 days.

90 Days Forward Rate = 1.0630 US $

4 million Australian Dollars x 1.0630 = $4,252,000

c. If the exchange rate is 0.9197 to $1:

Payment in US $ = 4 million Australian Dollars / 0.9197 = $4,349,244.3

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