Sonnenschein A.G.,a German retailer of solar panels just bought panels for US $100,000 to be paid in 120 days.As the financial manager,you are responsible for making a recommendation on the best hedging choice available to Sonnenschein A.G.You check with your banker and find out the following: The spot bid and ask rates are USD 1.1001/EUR and USD 1.0953/EUR respectively and the 120-day forward rates are EUR 0.8850/USD and EUR 0.8950/USD.Determine the net payables if Sonnenschein uses a forward hedge to manage its payables.

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The Answer of Sonnenschein A.G.,a German retailer of solar panels just bought panels for US $100,000 to be paid in 120 days.As the financial manager,you are responsible for making a recommendation on the best hedging choice available to Sonnenschein A.G.You check with your banker and find out the following: The spot bid and ask rates are USD 1.1001/EUR and USD 1.0953/EUR respectively and the 120-day forward rates are EUR 0.8850/USD and EUR 0.8950/USD.Determine the net payables if Sonnenschein uses a forward hedge to manage its payables.