Describe the effect on the transaction

Assignment Help Financial Accounting
Reference no: EM131778094

Question

Jo - Lo Ltd, a South African exporter, sells car parts to the value of €150 000 (Euro dollars) on 1 July 2013 to a company in Italy. Payment is made to Jo - Lo on 1 August 2013. The following information is available:


Price in €

Exchange rate

Price in R

I July 2013

€150 000

€1 = R14.25

R2 137 500

1 August 2013

€150 000

Unknown

Unknown

 

The forward Rand to € rate is trading at a Rand discount of 20% per annum.

Required:

Jo - Lo wants to take out forward cover. Calculate the forward rate and the value of the transaction as at 1 August 2013. Round to four decimal places.

Describe the effect on the transaction if on 1 August 2013 the R/€ rate is € 1 = 14.70 and Jo - Lo never entered into any forward cover contract.

Reference no: EM131778094

Questions Cloud

Explain the relevance of the given work for todays audiences : Analyze how this work explores a particular theme and/or stylistic characteristic from its period. Explain the relevance of this work for today's audiences.
Compare the opportunity costs of attending the concerts : Suppose your favorite band is on tour and coming to your area. Tickets are $100, and you take a day off from work for which you could have earned $60.
Describe communication styles : Traditional Paper Research define, and describe communication styles, the types of communication, and why communication is important to an organization.
Basic steps for risk management process : Explain briefly the following basic steps for Risk Management Process and explain the different strategies to manage different types of risks:
Describe the effect on the transaction : Calculate the forward rate and the value of the transaction as at 1 August 2013. Round to four decimal places - Describe the effect on the transaction
What is the accounts future worth : Suppose that exist2,000 is placed in a bank account at the end of each year over the next 20 years. What is the accounts future worth at the end of 20 years.
Serious problem facing the country : Road accidents are ranked as the 11th leading cause of death globally. The road traffic fatalities are second only to cardiovascular disease
Discussing a on boarding program for new employees : Write a 3 to 5 paper discussing a on boarding program for new employees, time, length, etc.
Describe any known antecedent or discriminative stimuli : Describe any known antecedent or discriminative stimuli; describe the behavior itself, and describe any reinforcers that are present.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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