What is the dollar value of its receivables if it does not

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Columbia Corp. has just made a sale to a British customer. The sale was for a total value of £135,000 and is to be paid 60 days from now. Columbia is concerned that the British pound will depreciate against the U.S. dollar, and management plans to hedge. The company"s bank informs management that the spot rate is $1.8133/£ and the 60-day forward rate is $1.7864/£. If Columbia sells its pounds receivable at the forward rate, what is the dollar value of its receivables? If it does not enter into a forward contract and the spot rate 60 days later is $1.7635/£, how much would the company lose by not hedging?

Reference no: EM13567832

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