Disadvantage to hedging using forward contract

Assignment Help Financial Management
Reference no: EM131819534

Intel Corporation has euros 100 million payables that need to be paid in 90-days. The current spot exchange rate is $1.1805/euro. The 90-day forward rate is $1.1846/euro.   If Intel wants to hedge its payables in euro 100 million, suggest a suitable hedging strategy using the forward contract and compute the total cost with the forward rate. If 90-days later the spot rate turned out to be $1.2152/euro, compute any advantage/disadvantage to hedging using the forward contract.

Reference no: EM131819534

Questions Cloud

How would the bond investment be classified on league up : Accounting for bond investments League Up & Co. owns vast amounts of corporate bonds. Suppose League Up buys $700,000 of CoteCorp bonds at face value.
How do you view police violence and secrecy : Westley viewed police violence and secrecy as a matter of morality. How do you view police violence and secrecy?
Compute cost allocation rates : What amount of the computer department's fixed costs will be allocated to the civil and family law divisions, respectively
Human computer interaction : This question is for a COMPUTER SCIENCE class (CIS 375 Human Computer Interaction). Please give a short answer. for each question.
Disadvantage to hedging using forward contract : Compute any advantage/disadvantage to hedging using the forward contract.
Explain the national and local rates : Explain the national and local rates. Have they gone up or down? How do they compare? Do you see trends? To what do you attribute the differences?
What types of tasks can you or have you used with a database : In your daily life, have you ever created or used a database? What types of tasks can you or have you used with a database?
What is the operating cash flow for this project : Ernie's Electrical is evaluating project that will increase sales by $150,000 and operating costs by $110,000. What is the operating cash flow for this project.
What method should Southeast Motors use to account : Accounting for stock investments Suppose that on January 6, 2016, Southeast Motors paid $450,000,000 for its 25% investment in Torque Motors.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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