Also Assume That a U

question 51

Multiple Choice

$$\begin{array} { l l r } \text { U.S. deposit rate for 1 year } & = & 11 \% \\\text { U.S. borrowing rate for 1 year } & = & 12 \% \\\text { New Zealand deposit rate for 1 year } & = & 8 \% \\\text { New Zealand borrowing rate for 1 year } & = & 10 \% \\\text { New Zealand dollar forward rate for 1 year } & = & \$ .40 \\\text { New Zealand dollar spot rate } & = & \$ .39\end{array}$$
Also assume that a U.S. exporter denominates its New Zealand exports in NZ$ and expects to receive NZ$600,000 in 1 year. You are a consultant for this firm.
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 money market hedge?

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

---

Definitions:

Traditional Income Statement

An income statement format that separates costs into categories of cost of goods sold and operating expenses to calculate net income.

Mixed Costs

Costs that have both a fixed and variable component, changing with the level of output but not directly proportional to it.

CVP Analysis

Cost-Volume-Profit Analysis is a technique in managerial accounting that examines the impact of cost and volume changes on a company’s operating and net income.

Cost-volume-profit

An analysis to determine how changes in costs and volume affect a company's operating income and net income.