Answer:
The correct answer is option (D).
Explanation:
According to the scenario, the following calculation can be done as follows:
Current rate at the time of purchase in pesos = $200,000 × 5.50
= 1,100,000 pesos
Cost of 1,100,000 pesos on the 90th day in dollar at 5.45 pesos / dollar= 1,100,000 / 5.45
= $201,834.86
Spot rate in 90 days for 1,100,000 pesos in dollar at 5.30 pesos / dollar = 1,100,000 / 5.30
= $ 207,547.17
Hence the saving of the firm can be calculated as follows :
Firm saves = Spot rate - Forward cost on 90th day
= $207,547.17 - $201,834.86
= $ 5,712.31