Question

Nicole's wrestling mats inc of pennslyvania has just sold a division to a british compnay that manufacture plastic coemponents for wreating mays. the sale price is £120,000 with payment due from the buying areholders in three months. The current spot rate is £.6424/S, and the three month forward rate is £.6448/3 How much will Nicole's receive if they used a forward hedge?

O a. $186,104

O b. $77,376

O c. $77,088

O d. $186,799

Answer 1

Hi! To find out how much Nicole's Wrestling Mats Inc will receive if they used a forward hedge, we need to use the given forward rate and the sale price. Here are the steps:

1. The sale price is £120,000.
2. The three-month forward rate is £0.6448/$.
3. To find the amount in dollars, divide the sale price by the forward rate: £120,000 / £0.6448/$.

Using the given information, let's calculate the answer:

£120,000 / £0.6448/$ = $186,104.

So, Nicole's Wrestling Mats Inc will receive $186,104 if they used a forward hedge. Your answer is:
a. $186,104