Date Spot Rate $0.0092 368 December 1, 2020 December 31, 2020 January 31, 2021 $0.0090 (2000) $0.0095 Assuming a forward contract was entered into on December 1, 2020, what would be the net impact on XYZ's 2020 income statement related to this foreign currency transaction? Assume annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is .9901. St MP .0093-00 $19,802 increase in net income - $8,000 decrease in net income - $8,000 increase in net income $11,802 decrease in net income $11,802 increase in net income $19,802 decrease in net income Forward Rate to 01/31/2021 FU $0.0098 $0.0093 N/A

Date Spot Rate $0.0092 368 December 1, 2020 December 31, 2020 January 31, 2021 $0.0090 (2000) $0.0095 Assuming a forward contract was entered into on December 1, 2020, what would be the net impact on XYZ's 2020 income statement related to this foreign currency transaction? Assume annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is .9901. St MP .0093-00 $19,802 increase in net income - $8,000 decrease in net income - $8,000 increase in net income $11,802 decrease in net income $11,802 increase in net income $19,802 decrease in net income Forward Rate to 01/31/2021 FU $0.0098 $0.0093 N/A

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter13: Marketable Securities And Derivatives

Section: Chapter Questions

Problem 21E

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