SUPPOSE A U.S. FIRM HAS JUST BOUGHT AN ASSET FROM A JAPANESE FIRM...

105. - BT THANH TOAN QUOC TE MULTINATIONAL FINANCIAL MANAGEMENT DAP AN
BT THANH TOAN QUOC TE MULTINATIONAL FINANCIAL MANAGEMENT DAP AN
105. Suppose a U.S. firm has just bought an asset from a Japanese firm for ¥500 million due in one year. Calculate today's cost (i.e. the present value) of meeting this obligation using a money market hedge. The spot exchange rate for Japanese yen is ¥122/$ and the one year forward exchange rate for Japanese yen is ¥130/$. The one-year interest rate is 5% in the U.S. The one-year interest rate in Japan is 12.00% a. $3,485,000 b. $3,659,250 c. $3,663,004 d. $3,842,213