12. On October 1, Boeing received an order from British Airways for a 747 for $200,000,000 to be paid on December 1. The exchange rates for $1 U.S. are as follows: Exchange Rates of $1 for British Pounds Spot rate, October 1 Spot rate, December 1 Forward rate, December 1 £.70 £.68 £.71 Required: If British Airways decided to hedge $150,000,000 and self insure the balance, what gain or loss would the company record on its books for the purchase of the 747? 13. On June 1, Dow Chemical purchased goods costing $140,000 from Mitsubishi in Japan. Payment for the goods is due August 1. The exchange rates for $1 U.S. are as follows: Exchange Rates of $1 for Yen Spot rate, June 1 Forward rate, August 1 Spot rate, August 1 ¥104 ¥102 ¥101 Required: If Mitsubishi decided to hedge $100,000 and self insure the balance, what gain or loss would the company record on its books for the sale to Dow Chemical?
12. On October 1, Boeing received an order from British Airways for a 747 for $200,000,000 to be paid on December 1. The exchange rates for $1 U.S. are as follows: Exchange Rates of $1 for British Pounds Spot rate, October 1 Spot rate, December 1 Forward rate, December 1 £.70 £.68 £.71 Required: If British Airways decided to hedge $150,000,000 and self insure the balance, what gain or loss would the company record on its books for the purchase of the 747? 13. On June 1, Dow Chemical purchased goods costing $140,000 from Mitsubishi in Japan. Payment for the goods is due August 1. The exchange rates for $1 U.S. are as follows: Exchange Rates of $1 for Yen Spot rate, June 1 Forward rate, August 1 Spot rate, August 1 ¥104 ¥102 ¥101 Required: If Mitsubishi decided to hedge $100,000 and self insure the balance, what gain or loss would the company record on its books for the sale to Dow Chemical?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![12. On October 1, Boeing received an order from British Airways for a 747 for
$200,000,000 to be paid on December 1. The exchange rates for $1 U.S. are as
follows:
Exchange Rates
of $1 for British Pounds
Spot rate, October 1
Spot rate, December 1
Forward rate, December 1
£.70
£.68
£.71
Required:
If British Airways decided to hedge $150,000,000 and self insure the balance,
what gain or loss would the company record on its books for the purchase of the
747?
13. On June 1, Dow Chemical purchased goods costing $140,000 from Mitsubishi
in Japan. Payment for the goods is due August 1. The exchange rates for $1 U.S.
are as follows:
Exchange
Rates
of $1 for Yen
¥104
Spot rate, June 1
Forward rate, August 1
Spot rate, August 1
¥102
¥101
Required:
If Mitsubishi decided to hedge $100,000 and self insure the balance, what gain
or loss would the company record on its books for the sale to Dow Chemical?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb9158a68-b6d0-4b93-a655-9932e2e9ee24%2Fc9bd1b12-b2e3-4809-b62b-f81508fcd511%2F5d7qif_processed.png&w=3840&q=75)
Transcribed Image Text:12. On October 1, Boeing received an order from British Airways for a 747 for
$200,000,000 to be paid on December 1. The exchange rates for $1 U.S. are as
follows:
Exchange Rates
of $1 for British Pounds
Spot rate, October 1
Spot rate, December 1
Forward rate, December 1
£.70
£.68
£.71
Required:
If British Airways decided to hedge $150,000,000 and self insure the balance,
what gain or loss would the company record on its books for the purchase of the
747?
13. On June 1, Dow Chemical purchased goods costing $140,000 from Mitsubishi
in Japan. Payment for the goods is due August 1. The exchange rates for $1 U.S.
are as follows:
Exchange
Rates
of $1 for Yen
¥104
Spot rate, June 1
Forward rate, August 1
Spot rate, August 1
¥102
¥101
Required:
If Mitsubishi decided to hedge $100,000 and self insure the balance, what gain
or loss would the company record on its books for the sale to Dow Chemical?
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