Forward rate: Baljit Ltd purchased machinery from a Japanese company and will have to pay ¥278.45 million in 90 days. The bank quotes a forward rate of ¥105.46/$ to buy the required yen. What is the cost to Baljit in U.S. dollars?

Question

Quizplus · Accepted Answer

First, we need to calculate the amount in U.S. dollars that Baljit Ltd. will need to pay for the ¥278.45 million:

¥278.45 million / ¥105.46 per $ = $2.640338 million

Therefore, the cost to Baljit in U.S. dollars is $2,640,338, which corresponds to answer choice A.

Forward Rate: Baljit Ltd Purchased Machinery from a Japanese Company