Instruction 11.2:Use the Information for the Following Problem(s)

question 5

Multiple Choice

Instruction 11.2:Use the information for the following problem(s) .
Oregon Transportation Inc. (OTI) has just signed a contract to purchase light rail cars from a manufacturer in Germany for euro 2,500,000. The purchase was made in June with payment due six months later in December. Because this is a sizable contract for the firm and because the contract is in euros rather than dollars, OTI is considering several hedging alternatives to reduce the exchange rate risk arising from the sale. To help the firm make a hedging decision you have gathered the following information.
-The spot exchange rate is $1.40/euro
-The six month forward rate is $1.38/euro
-OTI's cost of capital is 11%
-The Euro zone 6-month borrowing rate is 9% (or 4.5% for 6 months)
-The Euro zone 6-month lending rate is 7% (or 3.5% for 6 months)
-The U.S. 6-month borrowing rate is 8% (or 4% for 6 months)
-The U.S. 6-month lending rate is 6% (or 3% for 6 months)
-December call options for euro 625,000; strike price $1.42, premium price is 1.5%
-OTI's forecast for 6-month spot rates is $1.43/euro
-The budget rate, or the highest acceptable purchase price for this project, is $3,625,000 or $1.45/euro
-Refer to Instruction 11.2. What is the cost of a call option hedge for OTI's euro receivable contract? (Note: Calculate the cost in future value dollars and assume the firm's cost of capital as the appropriate interest rate for calculating future values.)

• A)$52,500
• B)$55,388
• C)$56,125
• D)$58,275

Describe the physiological effects of hormones on sexual behavior and orientation.

Analyze the significance of belongingness and relatedness needs in societal and personal contexts.

Understand the impact of psychological stressors on sexual behavior and identity.

Recognize the role of stories in conveying organizational culture.

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Definitions:

Stakeholder Needs

The requirements, expectations, or desires of individuals or groups who have an interest in the outcomes of an organization or project.

Separation Strategy

involves creating a clear differentiation or boundary between elements such as business units, projects, or functions to enhance focus and performance.

Bicultural Audit

An assessment process that examines the integration and coexistence of two distinct cultures within an organization, typically following a merger or acquisition.

Distinct Industries

Separate or unique sectors within the economy, each with its own characteristics and market dynamics.