Belsen purchased inventory on December 1, 2009.
Payment of 200,000 stickles was to be made in sixty days. Also on December 1, Belsen signed a contract to purchase §200,000 in sixty days.
The spot rate was $1 = §2.80, and the 60-day forward rate was $1 = §2.60. On December 31, the spot rate was $1 = §2.90 and the 30-day forward rate was $1 = §2.62.
Assume an annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is .9901.
What will be the book value of the Forward Contract on December 31?