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  3. us dairy corp, 31 dec 2022 - current eur/usd = 1.0

US Dairy Corp, 31 Dec 2022 - Current EUR/USD = 1.0 - US 6-month interest...

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Accounting

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US Dairy Corp, 31 Dec 2022 - Current EUR/USD = 1.0 - US 6-month interest rate =2.5% - Eurozone 6-month interest rate =1% A. Does the firm have long or short net foreign currency position? Calculate the net foreign asset/liability position in USD terms. B. If the EUR/USD moves to 1.25 during 2023, calculate the FX loss/gain of the firm and prepare the balance sheet using the new exchange rate. C. If the firm uses a 6M forward agreement to hedge its " NET"FX exposure, calculate 1) FX loss/gain on the net foreign asset/liability position and 2) the gain/loss on the forward contract. D. If the firm can borrow the USD equivalent of its AP and debt exposure at an interest rate of 4\% per 6month to purchase the required Euros at the spot price, settle the liability to the supplier + lenders and carry the debt on its books for 6 months, re-calculate the profit/loss. Is this strategy cost effective versus financial hedging using forwards as in question C

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