Anderson Australian Imports has agreed to purchase 10,000 cases of Australian be
ID: 2717058 • Letter: A
Question
Anderson Australian Imports has agreed to purchase 10,000 cases of Australian beer for 5 million Australian dollars at today's spot rate. The firm's financial manager, Linda Wilson, has noted the following current spot and forward rates:
On the same day, Wilson agrees to purchase 10,000 more cases of beer in 3 months at the same price of 5 million Australian dollars.
What is the price of the beer in U.S. dollars if it is purchased at today's spot rate? Round your answer to the nearest cent.
$
What is the cost in U.S. dollars of the second 10,000 cases if payment is made in 90 days and the spot rate at that time equals today's 90-day forward rate? Round your answer to the nearest cent.
$
If the exchange rate for the Australian dollar is 0.9106 to $1 in 90 days, how much will Wilson have to pay for the beer (in U.S. dollars)? Round your answer to the nearest cent.
$
Anderson Australian Imports has agreed to purchase 10,000 cases of Australian beer for 5 million Australian dollars at today's spot rate. The firm's financial manager, Linda Wilson, has noted the following current spot and forward rates:
U.S. Dollar/AustralianDollar Australian Dollar/U.S.
Dollar Spot 1.0756 0.9297 30-day forward 1.0710 0.9337 90-day forward 1.0635 0.9403 180-day forward 0.7845 1.2747
On the same day, Wilson agrees to purchase 10,000 more cases of beer in 3 months at the same price of 5 million Australian dollars.
What is the price of the beer in U.S. dollars if it is purchased at today's spot rate? Round your answer to the nearest cent.
$
What is the cost in U.S. dollars of the second 10,000 cases if payment is made in 90 days and the spot rate at that time equals today's 90-day forward rate? Round your answer to the nearest cent.
$
If the exchange rate for the Australian dollar is 0.9106 to $1 in 90 days, how much will Wilson have to pay for the beer (in U.S. dollars)? Round your answer to the nearest cent.
$
Explanation / Answer
Answer:
a) Price of the beer in U.S. dollars if it is purchased at today's spot rate:
5 million aus dollar * US$1.0756/Aus$ =US $5,378,000
b) Cost in U.S. dollars of the second 10,000 cases if payment is made in 90 days:
5 million aus dollar * US$1.0635/Aus$ = $5,317,500
c) In 90 days the exchange rate is = Aus $ 0.9106 to US$1, means (1/0.9106) US$/Aus$ = 1.0982 US$/Aus$
Payment in US$ = Aus$ 5,000,000 * 1.0982 US$/Aus$ = $5,491,000