Draft a memo to a client comparing the advantages and, Accounting Basics

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Draft a memo to a client comparing the advantages and

Forward Contracts:

Complete the following assignment. Submit your responses in MSWord as one document. Label each section clearly. If you choose to use an Excel spreadsheet for question 2, please copy and paste your spreadsheet into your Word document. For written answers, please make sure your responses are well written, conform to APA formatting, and have proper citations, if needed.

1. Draft a memo to a client comparing the advantages and disadvantages of using forward contracts and options to hedge foreign exchange risk.
2. On December 1, 2009, a U.S.-based company entered into a three-month forward contract to purchase 1 million Mexican pesos on March 1, 2010.
The following are the purchase rates for US dollar per peso

Date Spot Rate Forward Rate (March, 2010)

December 1, 2009 $0.088 $0.084

December 31, 2009 $0.080 $0.074

March 1, 2010 $0.076

The company's borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent (1 percent per month) is 0.9803.

How will the U.S. company report the forward contract on its December 31, 2009, balance sheet?

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Accounting Basics: Draft a memo to a client comparing the advantages and

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Accounting Basics: Draft a memo to a client comparing the advantages and

Reference No:- TGS0656985

Recent Questions Asked Accounting Basics

Q : Assume you are hired to design a managed care organization

Q : A 13-kg block of ice is initially at a temperature of

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