Find the real cost of hedging

Reference no: EM1344420

A US company negotiated a forward contract to buy 100,000 British pounds in 90 days. The company was supposed to use the £100,000 to buy British supplies. The 90-day forward rate was $1.40 per pound. On the day the pounds were delivered in accordance with the forward contract, the spot rate of the pound was $1.44. What was the real cost if hedging the pound payables in this example?

Reference no: EM1344420

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