Jackson Corp. (a U.S.-based company)sold parts to a Korean customer on December 16, 2021, with payment of 20 million Korean won to be received on January 15, 2022. The following exchange rates applied: Assuming a forward contract was entered into on December 16, at what amount should the forward contract be recorded at December 31, 2021? Assume an annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is 0.9901.
A)$396.
B)$594.
C)$1,188.
D)$1,200.
E)$792.

Question

Jackson Corp. (a U.S.-based company)sold parts to a Korean customer on December 16, 2021, with payment of 20 million Korean won to be received on January 15, 2022. The following exchange rates applied:  Assuming a forward contract was entered into on December 16, at what amount should the forward contract be recorded at December 31, 2021? Assume an annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is 0.9901.
A)$396. 
B)$594. 
C)$1,188. 
D)$1,200. 
E)$792.

Quizplus · Accepted Answer

The Answer of Jackson Corp. (a U.S.-based company)sold parts to a Korean customer on December 16, 2021, with payment of 20 million Korean won to be received on January 15, 2022. The following exchange rates applied:  Assuming a forward contract was entered into on December 16, at what amount should the forward contract be recorded at December 31, 2021? Assume an annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is 0.9901.
A)$396. 
B)$594. 
C)$1,188. 
D)$1,200. 
E)$792.