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kumpel [21]
3 years ago
11

Consider a US firm sells a gas turbine generator to a British firm; in March 201x for British pound BP 1,000,000. Payment is due

three months later in June 201x. The firm’s cost of capital is 12%. The following quotes are current in the market:1. spot rate: $1.764 per British pound2. 3-month forward rate: $1.754 per British pound3. 3-month interest rate for borrowing in U.K.: 2.5% Per quarter4. UK 3-month investment rate: 2.0% /quarter5. US 3-month borrowing rate: 2.0% /quarter6. US 3-month investment rate: 1.5% per quarter7. June put option in the over the counter market for British pound 1,000,000; strike price $1.71 (out-of-the money): 1% premium8. June put option on the Philadelphia Stock Exchange: a. British pound BP 31,250 per contract at strike price of $1.75 costb. 2.5 cents per pound premium, and brokerage cost $50 per contract9. the firm’s foreign exchange advisory service forecasts that the spot rate in three months will be $1.76 per pound.Show all your calculations of cost of the following alternatives:(i) Unhedged Position; (ii) Money Market Hedge; (iii) Forward market hedge; and (iv) Options Hedge;(Show your work. This means that No work is No credits)

Business
1 answer:
Varvara68 [4.7K]3 years ago
8 0

Answer:

Please see attachment

Explanation:

Please see attachment

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The following information is provided by Adametz​ Company: WIP​ Inventory, January 1 0 units Units started 7 comma 600 Units com
nikklg [1K]

Answer:

The equivalent units for conversion​ costs= 6,912 units

Explanation:

<em>The weighted average method of valuation would be used to determine the the equivalent units for conversion​ costs</em>

<em>Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked. </em>

Equivalent unit = Degree of completion × Units of inventory

<em>Items                                       units                                    Equivalent unit</em>

Completed   unit                     3,300       3,300× 100 =       3.300

Closing work in progress       4,300        4,300×  84%=      <u>3,612 </u>

Total equivalent units                                                           <u>6,912 </u>

The equivalent units for conversion​ costs= 6,912 units

7 0
3 years ago
Ed is taking off from work for four hours this afternoon and going to a baseball game. The ticket to the game costs $25 and it c
statuscvo [17]

Answer: $100

Explanation:

Opportunity cost is the benefit that we forgo when another option is chosen thereby leaving out something else. Based on the information given, Ed's opportunity cost of going to the ball will be calculated as the addition of the income that's lost when he takes some time off from his work and the expenses that he incurs on the base ball game. This will be:

= ( 4 × $15) + $25 + $15

= $60 + $40

= $100

The opportunity cost is $100.

8 0
3 years ago
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