XYZ Corporation, located in the United States, has an accounts payable obligation of ¥750 million payable in one year to a bank
in Tokyo. The current spot rate is ¥116/$1.00 and the one year forward rate is ¥109/$1.00. The annual interest rate is 3 percent in Japan and 6 percent in the United States. XYZ can also buy a one-year call option on yen at the strike price of $0.0086 per yen for a premium of $0.012 per 100 yen. Assume that the forward rate is the best predictor of the future spot rate. The future dollar cost of meeting this obligation using the option hedge is If firm is considering a forward hedge what should it do?
1 answer:
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Answer:
(the image attached) for the monthly production budget for january through June
Explanation:
1st We will list each month sales
Then, we will calcualte the desired ending inventory as 110% of next month sales:
february sales 2,750
So, January ending inventory: 2,750 x 1.10 = 3,025
And so on with all the months.
Then we subtract the beginning inventory as those units are already produced/ in company's stocks
Giving as a result the units to be produced.
