Assume the Following Information Also Assume That a U

question 49

Multiple Choice

Assume the following information:
$\begin{array}{llr}\text { U.S. deposit rate for } 1 \text { year } & = & 11 \% \\\text { U.S. borrowing rate for } 1 \text { year } & = & 12 \% \\\text { Swiss deposit rate for } 1 \text { year } & = & 8 \% \\\text { Swiss borrowing rate for 1 year } & = & 10 \% \\\text { Swiss forward rate for } 1 \text { year } & = & \$ .40 \\\text { Swiss franc spot rate } & = & \$ .39\end{array}$
Also assume that a U.S. exporter denominates its Swiss exports in Swiss francs and expects to receive SF600,000 in 1 year.
Using the information above, what will be the approximate value of these exports in 1 year in U.S. dollars given that the firm executes a forward hedge?

• A) $234,000.
• B) $238,584.
• C) $240,000.
• D) $236,127.