Transaction exposure. International Products has contracted for 6,500 winter hats from Russia. The contract price is 1,425 rubles per hat. The current direct exchange rate is 0.03948. The expected inflation rate for the next 3 months is 5.7% in the United States and 1.9% in Russia. If International Products will pay for the hats at delivery and scheduled delivery is 3 months away, what is the cost of the hats in U.S. dollars? Did waiting the 3 months to pay increase or decrease the payment (in U.S. dollars)? If so, by how much? If International Products will pay for the hats at delivery and scheduled delivery is 3 months away, what is the cost of the hats in U.S. dollars? (Round to the nearest cent.) Did waiting the 3 months to pay increase or decrease the payment (in U.S. dollars)? If so, by how much? (Select the best response.) O A. Waiting the 3 months to pay increases the payment by $3,362.31. O B. Waiting the 3 months to pay decreases the payment by $3,362.31. OC. Waiting the 3 months to pay does not change the amount of payment. O D. Waiting the 3 months to pay decreases the payment by $3,564.05. O E. Waiting the 3 months to pay increases the payment by $3,564.05.

Transaction exposure. International Products has contracted for 6,500 winter hats from Russia. The contract price is 1,425 rubles per hat. The current direct exchange rate is 0.03948. The expected inflation rate for the next 3 months is 5.7% in the United States and 1.9% in Russia. If International Products will pay for the hats at delivery and scheduled delivery is 3 months away, what is the cost of the hats in U.S. dollars? Did waiting the 3 months to pay increase or decrease the payment (in U.S. dollars)? If so, by how much? If International Products will pay for the hats at delivery and scheduled delivery is 3 months away, what is the cost of the hats in U.S. dollars? (Round to the nearest cent.) Did waiting the 3 months to pay increase or decrease the payment (in U.S. dollars)? If so, by how much? (Select the best response.) O A. Waiting the 3 months to pay increases the payment by $3,362.31. O B. Waiting the 3 months to pay decreases the payment by $3,362.31. OC. Waiting the 3 months to pay does not change the amount of payment. O D. Waiting the 3 months to pay decreases the payment by $3,564.05. O E. Waiting the 3 months to pay increases the payment by $3,564.05.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter11: Managing Transaction Exposure

Section: Chapter Questions

Problem 51QA

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