1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Verizon [17]
3 years ago
9

Assume that Parker Co. will receive SF200,000 in 360 days. Assume the following interest rates: U.S. Switzerland 360-day borrowi

ng rate 7% 5% 360-day deposit rate 6% 4% Assume the forward rate of the Swiss franc is $.50 and the spot rate of the Swiss franc is $.48. If Parker Co. uses a money market hedge, it will receive ____ in 360 days.
a. $101,904
b. $101,923
c. $98,769
d. $96,914
e. $92,307
Note– remember from class how we hedge receivables (that is borrow in the country where the receivables will be received)
Business
1 answer:
frez [133]3 years ago
3 0

Answer:

d. $96,914

Explanation:

Parker Co. can execute money market hedge in following steps:

(1) Parker Co. pledges Receivable of SF200,000 to borrow SF190,476 with rate 5% in Switzerland; SF190,476 = SF200,000/ (1+5%)

so it has to pay interest expense of SF9,524 in 360 days. The receivable of SF200,000 is enough for both principal and interest in 360 days.

(2) Then it sells SF190,476 at spot rate $0.48 to get $91,428

(3) Then it deposits $91,428 in US with rate 6% to get back $96,914 in 360 days ; $96,914 = $91,428 * (1+6%)

You might be interested in
The business was started when the company received $48,500 from the issue of common stock. Purchased equipment inventory of $176
masya89 [10]

Answer:

Total current liabilities  85.008,33‬

Explanation:

current liabilities: obligations that will setlte within a one-year period

<em />

<em>accounts payable</em> from the purchase of equipment:

cost:          176,500

paid:      <u>  (125,900)  </u>

balance:    50,600

<em />

<em>waranty liaiblity:</em>

191,000 x 5% = 9,550

<em>sales tax payable:</em>

sales for     191,000

paid for   <u>  (141,000)  </u>

unpaid for  50,000 x 6% = 3,000

<em>note payable</em> with a local bank:

principal:   21,500

accrued interest: 21,500 x 5% x 1/3 = 358,33

net:   21,858.33

<u>Total current liabilities:</u>

accounts payables 50,600

warrant liability:        9,550

sales tax payable:    3,000

note payable:     <u>    21,858.33   </u>

                             85.008,33‬

5 0
3 years ago
Hibiscus Corporation began operations on January 1, Year 1. On December 15, Year 1, the company received a payment in the amount
mars1129 [50]

Answer:

$12,000

Explanation:

The main difference between cash basis accounting and accrual accounting is that accrual accounting recognizes revenue only after the earning process is completed. On the other hand, cash basis accounting recognizes revenue and expenses when the money is received or paid, regardless of when the service is provided. This is why the US GAAP doesn't allow cash basis accounting.

The IRS allows cash basis accounting for individuals and small businesses that only deal with cash payments, but they must meet certain criteria:

  • partnerships or C corporations with less than $5 million in yearly revenue
  • sole proprietorships and S corporations with less than $1 million in yearly revenues
  • family owned farms
  • you provide personal services and 95% of your revenue comes from it
  • no publicly traded corporation is allowed

4 0
3 years ago
Choose the correct answer in the following statements about financial and real assets.
lora16 [44]

Answer: Please refer to Explanation

Explanation:

A financial asset is a non-physical asset that that gets it's value from a contract that was signed by the parties involved.  Financial assets include Bonds, stocks and even cash amongst others.

Real Assets on the other hand are physical assets that can be seen and hence have an inherent value. Examples include buildings and cars.

a.  Toyota <u>creates</u> a <u>real asset</u>- the factory. The loan is a <u>financial asset </u>that is <u>created</u> in the transaction.

The factory becomes a real Asset that is tangible and has an inherent value. The loan was created by an agreement between Toyota and the bank and so is a Financial Asset.

b. When the loan is repaid, the <u>financial</u> asset is <u>destroyed</u> but the <u>real</u> asset continues to exist.

When the loan is repaid, Toyota no longer owns that financial asset because it has gone back to the bank. However, the Real Asset which is the factory that they were able to build will remain with Toyota.

c. The cash is a <u>financial</u> asset that is traded in exchange for a <u>real</u> asset, inventory.

As already mentioned, cash is a financial asset. Inventory is a tangible substance with an inherent value not determined by a contract and so is a Physical Asset. Trading cash for Inventory is therefore trading a financial asset for a physical one.

3 0
3 years ago
"At that time, the market price of ABC is $44. If the market rises to $58 and the call is exercised (the put expires out the mon
steposvetlana [31]

Answer:

600 loss

Explanation:

The computation of the gain or loss is shown below:

Since on Jan, there is a put option of 45 at $3 and the market rises to $58

So it losses by 13 points i.e

= 45 - 58

= 13

Now the total premium points collected is of 7 i.e

= 4 + 3

= 7

So, the remaining points left is

= 13 - 7

= 6

So for 6 points, the net loss is $600

7 0
3 years ago
Wendy goes shopping and finds two outfits that she really likes, but she can only afford to purchase one. what type of conflict
nikklg [1K]

<span>Indecision is the type of conflict Wendy is suffering.  </span><span>Consumer chooses a competing choice, rather than the previously purchased choice, on the next purchase occasion. Categories of switching costs include procedural, financial, and relational.  based on the affect, or feeling, attached to the products or behavior under consideration and trying to make  perspective- assumes consumers often make purchases and reach decisions is  </span>Experiential decisions.

 

<span> </span>

6 0
3 years ago
Other questions:
  • Search the Internet for information on software development management policies.
    15·1 answer
  • You have 2500 square feet for selling space. You want to reserve at least 125 square feet for each product category you will car
    13·1 answer
  • Riley is a 50% partner in the RF Partnership and has an outside basis of $56,000 at the end of the year prior to any distributio
    15·1 answer
  • It’s time for the Bizlaw County auction! For each of the auction items listed below, you will (1) determine which type of proper
    7·1 answer
  • The budget for making the movie The Twilight Saga: New Moon was one-fifth the budget for making Harry Potter: The Half Blood Pri
    7·1 answer
  • Refer to Stevenson, Ross, and Warner. Which of the following represents a key component of the Sarbanes-Oxley Act relating to co
    14·1 answer
  • You wish to buy a cabin in 15 years. TODAY, the cabin costs $150,000. You believe the price of the cabin will inflate at 4% annu
    11·1 answer
  • Suppose Kim purchases a new personal computer produced in China for $ 2,800. What is the effect on the components of GDP and GDP
    5·1 answer
  • In the five C's, how is cost different from price?
    11·1 answer
  • Melting
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!