What will be the approximate value of these exports in 1


Assume the following information:

            U.S. deposit rate for 1 year                 = 8%

            U.S. borrowing rate for 1 year            = 9%

            Swiss deposit rate for 1 year            = 6%

            Swiss borrowing rate for 1 year          = 8%

            Swiss forward rate for 1 year            =          $.40

            Swiss franc spot rate                        =          $.39

Also assume that a U.S. exporter denominates its Swiss exports in Swiss francs and expects to receive SF600,000 in 1 year.

Using the information above, what will be the approximate value of these exports in 1 year in U.S. dollars given that the firm executes a forward hedge?

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Financial Management: What will be the approximate value of these exports in 1
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