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1. Apple Corp. has some dealings with both a customer and a supplier in Singapore that occurred on August 1 with cash flows to occur six months later on January 31. Remember, Apple has a yearend of September 30. Apple has an incremental borrowing rate of 6% (I posted TVM tables for you on Canvas). Date August 1, Y1 Sept 30, Y1 Jan 31, Y2 Spot Rate .735 .739 Forward rate (To Jan 31, Y2) .739 .737 1. Apple Corp. .738 receivables parts from a Singaporean supplier on August 1, Year 1 for 1,000,000 SGD, to be paid in 6 months. Apple purchased a foreign currency forward contract on August 1 that is properly designated as a fair value hedge. Write the entries and show the IS and BS effects for Sept 30 and Jan 31 2. What if Apple designated this as a cash flow hedge instead? Write the entries and show the IS and BS effects for Sept 30 and Jan 31. 3. What is the advantage to using a cash flow hedge over a fair value hedge? When would you have to use a fair value hedge? 4. Why do companies hedge their foreign currency denominated receivables and payables? Is it always worthwhile? Payable's 5. Write entries if Apple pie parts inventory on August 1 for 1,000,000 SGD. Apple designated the FCFC as a cash flow hedge. Write the entries and show the IS and BS effects for Sept 30 and Jan 31

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