FrameSuite Co., a U.S. multinational corporation, has just ordered materials from a British firm. The transaction...

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Finance

FrameSuite Co., a U.S. multinational corporation, has justordered materials from a British firm. The transaction isdenominated in British pounds and your firm will need 2,700,000pounds in 1 year to pay for the purchase. The 1-year forward rateof the British pound is $1.35 while the spot rate is $1.44. Thefollowing interest rates exist:
U.S.
Britain
1 year borrowing rate
6%
7%
1 year deposit rate
4%
3%

Given the information above, If you use a money market hedge, theamount of dollars you need in 1 year is:
$3,778,991.
$4,017,155.
$3,924,679.
$3,645,000.
$4,001,243.

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Transcribed Image Text

FrameSuite Co., a U.S. multinational corporation, has justordered materials from a British firm. The transaction isdenominated in British pounds and your firm will need 2,700,000pounds in 1 year to pay for the purchase. The 1-year forward rateof the British pound is $1.35 while the spot rate is $1.44. Thefollowing interest rates exist:U.S.Britain1 year borrowing rate6%7%1 year deposit rate4%3%Given the information above, If you use a money market hedge, theamount of dollars you need in 1 year is:$3,778,991.$4,017,155.$3,924,679.$3,645,000.$4,001,243.

	U.S.	Britain
1 year borrowing rate	6%	7%
1 year deposit rate	4%	3%