Tamcon Industries has purchased equipment from a Brazilian firm for a total cost of 1,272,500 Brazilian reals (BR). The firm has to pay in 30 days. Citicorp has given the firm a 30-day forward quote of $0.6123/BR. Assume that on the day the payment is due, the spot rate is at $0.6317/BR. How much would Tamcon save by hedging with a forward contract? (Round your final answer to the nearest dollar.)

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By hedging with the forward contract at $0.6123/BR, Tamcon would pay 1,272,500 BR * $0.6123/BR = $779,152.25. Without hedging, at the spot rate of $0.6317/BR, Tamcon would pay 1,272,500 BR * $0.6317/BR = $803,838.75. The savings from hedging would be $803,838.75 - $779,152.25 = $24,686.50, which rounds to $24,687.

Tamcon Industries Has Purchased Equipment from a Brazilian Firm for a Total