xyz company has an account receivable of 10000 from a british company to be paid in three months

Name: xyz company has an account receivable of 10000 from a british company to be paid in three months the additional information is as follows british pound spot rate 20290 british pound 3 month 57556
Uploaded: 2023-08-29T22:09:00-08:00
Duration: 3 min 41 s
Channel: Madhur L
Description: xyz company has an account receivable of 10000 from a british company to be paid in three months the additional information is as follows british pound spot rate 20290 british pound 3 month 57556

Question

XYZ Company has an accounts receivable of Â£10,000 from a British company to be paid in three months. The additional information is as follows: British pound spot rate: $2.0290 British pound 3-month forward rate: $2.0032 3-month interest rate in the US: 2% 3-month interest rate in the UK: 3% What will be the approximate value of the accounts receivable in US dollars if the company makes a forward market hedge? What will be the approximate value of the accounts receivable in US dollars if the company makes a money-market hedge?

          XYZ Company has an accounts receivable of Â£10,000 from a British company to be paid in three months. The additional information is as follows:
British pound spot rate: $2.0290
British pound 3-month forward rate: $2.0032
3-month interest rate in the US: 2%
3-month interest rate in the UK: 3%
What will be the approximate value of the accounts receivable in US dollars if the company makes a forward market hedge?
What will be the approximate value of the accounts receivable in US dollars if the company makes a money-market hedge?

Added by David G.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Madhur L

08/29/2023

Step 1

Forward Market Hedge: In this case, the company would enter into a forward contract to sell British pounds at the forward rate. The value of the accounts receivable in US dollars would be the British pound receivable amount multiplied by the forward rate. So, Show more…

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XYZ Company has an accounts receivable of Â£10,000 from a British company to be paid in three months. The additional information is as follows: British pound spot rate: $2.0290 British pound 3-month forward rate: $2.0032 3-month interest rate in the US: 2% 3-month interest rate in the UK: 3% What will be the approximate value of the accounts receivable in US dollars if the company makes a forward market hedge? What will be the approximate value of the accounts receivable in US dollars if the company makes a money-market hedge?