Calculate the company peso transaction exposure

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Suppose an agribusiness in Texas exports its crops. It expects an 18 million peso invoice for an export to Mexico to be paid in 90 days. The current spot and 90-day forward rates are $0.7502/Peso and $0.7422/Peso respectively.

a. Calculate the company's peso transaction exposure associated with this fee.

b. If the spot rate expected in 90 days is $0.7489, what is the expected U.S. dollar value of the invoice?

c. What is the hedged dollar value of the invoice?

Reference no: EM131647615

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