IBM Enters into a Forward Contract to Purchase 200,000 Euros

question 75

Multiple Choice

IBM enters into a forward contract to purchase 200,000 euros at a rate of $1.90/euro one year from today.If the spot exchange rate is $2/euro one year later,what is the dollar amount that IBM must pay to receive the euros.

• A)$300,000
• B)$325,000
• C)$380,000
• D)$400,000