Real cost of Hedging Payables Assume that Suffolk Co. negotiated a for ward contract to purchase 200,000 British pounds in 90 days. The 90 -day forward rate was $1.40 per British pound. The pounds to be purchased were to be used to purchase British supplies. On the day the pounds were delivered in accordance with the forward contract, the spot rate of the British pound was $1.44. What was the real cost of Ihedging the payables for this U.S. firm?
Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*
*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.