Car Corp. (a U.S. based company) sold parts to a Korean customer on December 16, 2008, with payment of 10 million Korean won to be received on January 15, 2009. The following exchange rates applied:
December 16, 2008: Spot Rate $0.00090, Forward Rate to January 15 $0.00098
December 31, 2008: Spot Rate $0.00092, Forward Rate to January 15 $0.00093
January 15, 2009: Spot Rate $0.00095, Forward Rate to January 15 $0.00095
Assuming a forward contract was not entered into, what would be the net impact on Car Corp's 2008 income statement related to this transaction?
Assuming a forward contract was entered into, what would be the net impact on Car Corp's 2008 income statement related to this transaction, assuming an annual interest rate of 12% and a fair value hedge? The present value for one month at 12% is 0.9901
Assuming a forward contract was entered into on December 16, what would be the net impact on Car Corp's 2009 income statement related to this transaction?