On January 1, XYZ, a US company, purchased inventory from a Japanese supplier for ¥100,000,000, with payment to be made on February 28. At the same time, it decided to enter into a forward contract to hedge the yen liability. Assume the following exchange rates relative to the transaction:
110 per $ January 1 spot rate
108 forward rate quoted on January 1 for delivery on February 28
109 spot rate on January 31
109 forward rate quoted on January 31 for delivery on February 28
112 spot rate on February 28
How many dollars would XYZ have to pay the Japanese supplier, and what would be the dollar value of the purchase?