As a Canadian Exporter you have agree to offer 270 days credit terms to your Spanish buyer. You obtain information from your bank on the forward exchange rate contract and given the following information.
- Calculate the forward exchange rate the bank will provide
- Calculate the Canadian dollar proceed you will receive.
Amount contract 4.5 million euros
spot rate 0.7971 (buy)
0.789 (sell)
Interest rate Toronto 2.5%
Interest rate Madrid 4.5%