A us company expects to pay 2500000 japanese yen 30 days, Financial Management

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A us company expects to pay 2500000 japanese yen 30 days

A US company expects to pay 2,500,000 Japanese yen 30 days from now. It decides to hedge thee position by buying Japanese yen forward. The current spot rate of the yen is $.0089, while the forward rate is $0.0090. The firm expects the spot rate in 30 days to be $.0094. Based on its expectations the company enters into derivative contracts to maximize its profits. How many dollars will the company pay for the 5,000,000 yen 30 days from now?

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Financial Management: A us company expects to pay 2500000 japanese yen 30 days

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