Determine expected rate, Cost Accounting

Assignment Help:

Bebe, a manufacturer of sophisticated and fashionable women's clothing, is completing a new assembly plant in Malaysia.  A final construction payment of 6,000,000 MYR (Malaysian Ringgit) is due in six months.  Bebe uses a 10% annual rate for its weighted average cost of capital. Today's foreign exchange and interest rate quotations are:

Present spot rate            MYR 3.3000/USD

Six-month forward rate       MYR 3.2000/USD

Malaysian interest rate      3% per annum

US dollar interest rate           6% per annum

Bebe's treasury manager, concerned about the Malaysian economy, wonders whether Bebe should be hedging its foreign exchange risk.  The manager's own forecast is as follows:

Expected rate (in 6 months or 180 days):

Highest            MYR 3.5000/USD

Expected           MYR 3.2500/USD

Lowest                  MYR 3.0000/USD

What realistic alternatives are available to Bebe for making payment?  Which method would you select and why?


Related Discussions:- Determine expected rate

Finance and logistics, responsibility of director of finance and logistics

responsibility of director of finance and logistics

Determine the total amount of product cost, Product and period costs; CGM; ...

Product and period costs; CGM; CGS On August 1, 2013, Sietens Corporation had the following account balances: Raw Material Inventory (both direct and indirect) :- $ 72,000 WIP Inve

Multiple product scenarios, Break-even analysis can be used to work out eit...

Break-even analysis can be used to work out either a break-even volume or revenue, as per given a multiple product scenario. This is achieved using 'average contribution per unit'

Compute the cost per unit, Fosson Furniture uses a process cost system to a...

Fosson Furniture uses a process cost system to account for its chair factory. Beginning inventory consisted of 5,000 units (100% complete as to material, 55% complete as to labor)

Produce a revenue statement, XYZ Co. manufactures automation machinery acco...

XYZ Co. manufactures automation machinery according to customer specifications.  The company is relatively new and has grown each year.  XYZ Co. operated at about 75% of practical

Developing and insight into labour and material variance, Developing and In...

Developing and Insight into Labour and Material Variance The calculation of labour and material variances is not sufficient; we require knowing how the variance could have typ

Retirement account, You want to have $2,000,000 in your retirement account ...

You want to have $2,000,000 in your retirement account (IRA) at the end of 30 years. You hope to earn 6% per year. How much must you save each year?

What is the net present value using a 12% cost of capital?, Keira Knightley...

Keira Knightley Company buys a piece of equipment for $36,442 that will last for 7 years. The equipment will generate cash flows of $7,000 per year and will have no salvage value a

Estimating the number of shares with returns less, The file A1Q1 contains d...

The file A1Q1 contains data for the percentage change in the price of 50 shares selected at random from the Australian Stock Exchange. The data refer to the percentage change in th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd