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Shown below are exchange rates for several currencies.   US$ per 1 euro US$ per 1 franc Mexican peso per...

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Finance

Shown below are exchange rates for severalcurrencies.  

US$ per 1 euroUS$ per 1 francMexican peso per US$1
Spot rate1.211.0319.68
30-day forward rate1.191.0620.15
60-day forward rate1.151.0721.28

A U.S. company purchases goods from several foreign companieswith payment due in euros, francs, and pesos.  Would thecompany be better off paying any of the suppliers now or should itwait 60 days? Why?

Answer & Explanation Solved by verified expert
3.8 Ratings (533 Votes)
1 Purchases in euros It is better to pay 60 days later as only lesser number of dollars would be needed to buy the euros then If the amount payable is 1000 euros Paying now will require 1000121 121000    See Answer
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Transcribed Image Text

Shown below are exchange rates for severalcurrencies.  US$ per 1 euroUS$ per 1 francMexican peso per US$1Spot rate1.211.0319.6830-day forward rate1.191.0620.1560-day forward rate1.151.0721.28A U.S. company purchases goods from several foreign companieswith payment due in euros, francs, and pesos.  Would thecompany be better off paying any of the suppliers now or should itwait 60 days? Why?

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