On November 1, 20x2, Irvin Corp. sold goods to John Company for 130,000 rupee. Payment is due on March 30, 20x3. Also on November 1, 20x2,Irvin Corp. entered into a forward contract to sell 130,000 rupees on March 1, 20x3. The following are the exchange rates:Dec. 31,Nov. 1, 20x2Mar. 30, 20x320x2Spot rates0.820.800.87Forward rate 0.850.860.88Irvin's incremental borrowing rate is 8%.What is the forex gain or loss on hedge item?2,600 lossO 1,300 gainO 1,300 lossO 2,600 gain

Amount = 130,000 Rupee Forward Rate of Nov 1,20x2 contract = 0.85 Spot Rate at Mar. 30, 20x3 = 0.87

Answered: On November 1, 20x2, Irvin Corp. sold…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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