Sensitivity of NPV to Conditions Burton Co., based in the United States, considers a project in which it has an initial outlay of $3 million and expects to receive 10 million Swiss francs in one year. The spot rate of the Swiss franc is $0.80. Burton Co. decides to purchase put options on Swiss francs with an exercise price of $0.78 and a premium of $0.02 per unit to hedge its receivables. It has a required rate of return of 20 percent.
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