Below is the balance sheet of a Japanese subsidiary of a US company. The current spot exchange rate is 109.00/US$. Assets Cash and marketable securities 10,000,000 Accounts receivables 90,000,000 Inventory 20,000,000 Fixed assets 500,000,000 Goodwill 100,000,000 Total assets 720,000,000 Liabilities Accounts payable Current debt Long-term debt Total liabilities 20,000,000 80,000,000 300,000,000 400,000,000 Equity Paid-up capital Retained earning 250,000,000 70,000,000 320,000,000 Total equity (a) What are the translation exposures (in Japanese Yen) of this subsidiary according to the currentoncurrent, monetaryonmonetary, temporal, and current rate method, respectively? What will be the respective translation gain/loss (in US$) if Yen depreciates from the current level of 109.00/US$ to 118.00/US$ according to each of these four methods? (b) Under each of the four translation methods considered in (a), describe and explain how the US company can use a one-year forward contract on Yen to hedge against its translation exposure. Specifically, is it the long or short forward contract that the company needs to enter into? What is the size of the forward contract the company needs to enter into? Demonstrate the offsetting effect after entering into the forward contract. Assume the one-year forward exchange rate is 109.00/US$. Below is the balance sheet of a Japanese subsidiary of a US company. The current spot exchange rate is 109.00/US$. Assets Cash and marketable securities 10,000,000 Accounts receivables 90,000,000 Inventory 20,000,000 Fixed assets 500,000,000 Goodwill 100,000,000 Total assets 720,000,000 Liabilities Accounts payable Current debt Long-term debt Total liabilities 20,000,000 80,000,000 300,000,000 400,000,000 Equity Paid-up capital Retained earning 250,000,000 70,000,000 320,000,000 Total equity (a) What are the translation exposures (in Japanese Yen) of this subsidiary according to the currentoncurrent, monetaryonmonetary, temporal, and current rate method, respectively? What will be the respective translation gain/loss (in US$) if Yen depreciates from the current level of 109.00/US$ to 118.00/US$ according to each of these four methods? (b) Under each of the four translation methods considered in (a), describe and explain how the US company can use a one-year forward contract on Yen to hedge against its translation exposure. Specifically, is it the long or short forward contract that the company needs to enter into? What is the size of the forward contract the company needs to enter into? Demonstrate the offsetting effect after entering into the forward contract. Assume the one-year forward exchange rate is 109.00/US$