The Following Information Pertains to Questions

question 44

Multiple Choice

The following information pertains to questions
On July 1,2014,when the spot rate was US$1=CDN$1.1445,North Inc,based in the Alberta,ordered merchandise from an American supplier for US$600,000.Delivery was scheduled for the month of September,with payment to be made in full by December31,2014.
Once the order was placed,North entered into a forward contract with its bank to purchase US$600,000 in December at the forward rate of $1.1625CDN.The merchandise was received on October 1,2014,when the spot rate was US$1=$1.1575CDN.On October 31,the company's year-end,the spot rate was $1.1690.North purchased the U.S.dollars to pay its supplier on November 15,2014 when the spot rate was $1.1725CDN.
-What is the amount of the premium on the forward contract?

• A)Nil
• B)$11,000
• C)$3,900
• D)$6,000

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Definitions:

Entry-level Positions

Jobs designed for individuals with little to no professional experience, typically requiring minimal qualifications.

Goodwill

An intangible asset representing the value of a company's brand, customer base, and reputation.

Beginner's Mistakes

Common errors made by novices in a particular field, often due to lack of experience, which can serve as valuable learning opportunities.

Tangible Assets

Physical and material assets that have monetary value and can be seen, touched, and quantified, such as machinery, buildings, and inventory.