PPP and Cash Flows Boston Co. will receive 1 million euros in one year from selling exports. It did not hedge this future transaction. Boston believes that the future value of the euro will be determined by purchasing power parity (PPP). It expects that inflation in countries using the euro will be 12 percent next year, whereas inflation in the United States will be 7 percent next year. Today the spot rate of the euro is $1.46, and the one-year forward rate is $1.50.
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