Your brewery produces bakersfield Bland, a low calorie, low taste beer that has

Question

Your brewery produces bakersfield Bland, a low calorie, low taste beer that has yet developed International following. In mid-march, you receive an order of 10,000 cartons from Munich, Germany for the next Oktoberfest, with payment of Euro 672,000 due in mid-september before the beer is consumed. In your opinion, the Euro will rise from its present rate of Euro 2.8000/$ to Euro 2.6500/$ by September, and you learn you can borrow Euro's for six months at 6% P.A. Note the answers are either correct or they are not their are no transpositions

If you lock into a forward contract, you will receive Select one:

a. $233,010

b. 4253,585

c. euro652,427

d. need more information

Explanation / Answer

B) $ 253585

Euro Conversion $ Mid Mar 672000 2.8              2,40,000 Mid Sep 672000 2.65              2,53,585 As payment is due in September, payment will be receive = $ 253585

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