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DanielleElmas [232]
3 years ago
13

YZ Corporation, located in the United States, has an account payable of 750-million yen payable in one year to a bank in Tokyo.

The current spot rate is yen 116 per $ and the one year forward rate is yen 109 per $. The annual interest rate is 3 percent in Japan and 6 percent in the United States (assume the same lending and borrowing rates). The future (in one year) dollar cost of meeting this obligation using the money market hedge is:
Business
1 answer:
EleoNora [17]3 years ago
8 0

Answer:

Dollar cost of the foreign payable = $  6,653,833.28  

Explanation:

The money market hedge would be set up as follows:

<em>Step 1: Deposit in Yen (Tokyo)</em>

Deposit an amount in Yen  equal to

Amount to be deposited= Payable/(1+deposit rate)

= 750,000,000/(1.03)

=  Yen 728,155,339.8

<em>Step 2 : Convert the sum</em>

Convert Yen 728,155,339.8 at the spot rate  of yen 116 per $

Dollar amount =  728,155,339.8   / 116

                         = $ 6,277,201.205

<em>Step 3: Borrow at home (US)</em>

Borrow $ 6,277,201.205  for one year at an interest rate of 6%

Amount due (inclusive of interest) = Amount borrowed × 1.06

                                                       =$ 6,277,201.205 × 1.06

                                                        = $  6,653,833.28  

Dollar cost of the foreign payable = $  6,653,833.28  

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3 years ago
Sales and Production Budgets Ultimate Audio Company manufactures two models of speakers, U500 and S1000. Based on the following
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Answer:

Part a

Ultimate Audio Company

<u>Sales Budget </u>

<u>For the Month Ending June 30</u>

Product and Area         Unit Sales Volume  Unit Selling Price  Total Sales

Model U500 :

Northeast Region             140,000                       $45               $6,300,000

Southwest Region            160,000                       $45               $7,200,000

Total                                                                                            $13,500,000

Model U500 :

Northeast Region            100,000                       $80               $8,000,000

Southwest Region           125,000                       $80              $10,000,000

Total                                                                                           $18,000,000

Total Revenue from Sales                                                        $31,500,000

Part b

Ultimate Audio Company

<u>Production Budget </u>

<u>For the Month Ending June 30</u>

                                                                   Model U500     Model S1000

Expected Units to be Sold                           300,000             225,000

Add Desired Closing Inventory                      30,000                15,000

Total                                                               330,000             240,000

Less Desired Opening Inventory                  (25,000)              (10,000)

Total Production                                            305,000            230,000

Explanation:

<em>Note : I have attached the complete question as images below !</em>

A Sales Budget shows the Total Expected Revenue from sale of budgeted units.

     Total Revenue = Total Expected Units Sales x Selling Price Per Unit

A Production Budget shows the number of units to be produced to meet the Sales and Inventory targets

     Total Production = Expected Sales + Desired Closing Inventory - Desired Opening Inventory

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3 years ago
Thyme, Inc. owns 16,000 of Sage Co.'s 20,000 outstanding common shares. The carrying value of Sage's equity is $500,000. Sage su
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Answer:

The total non controlling interest after the additional shares are issued is equal to $252,000.

Explanation:

Before the issue Sage co's had 20,000 shares with total equity value of $500,000. After the issue of 5000 shares worth $200,000, the total number of shares and equity would be -

Total number of shares = 25,000 ( 20,0000 + 5000 )

Total equity value          = $700,000

Now Thyme inc owns 16,000 number of shares , which means that minority holds 9000 number of shares . Now the price per share would be =

       TOTAL EQUITY / NUMBER OF SHARES

         $700,000 / 25,000

=        $28

NON CONTROLLING INTEREST = Minority shares x Price per shares

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                                                      = $252,000

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3 years ago
Creble Company reported net income for 2016 in the amount of $40,000. The company's financial statements also included the follo
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Answer:

$36,000

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Answer:

B) $7

Explanation:

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Consumer surplus = Willing to pay - Market price

For Austin, The consumer surplus = $10 - $6 = $4

For Erin, The consumer surplus = $9 - $6 = $3

So, the total consumer surplus = $4 + $3 = $7

Simply we deduct the market price from the willing to pay so that the consumer surplus can be computed

8 0
3 years ago
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