Exhibit 11-1 -Refer to Exhibit 11-1

question 42

Multiple Choice

Exhibit 11-1
$\begin{array}{lll} & \text { U.S. } & \text { Jordan } \\360 \text {-day borrowing rate } & 6 \% & 5 \% \\360 \text {-day deposit rate } & 5 \% & 4 \%\end{array}$

-Refer to Exhibit 11-1. Pablo Corp. will need 150,000 Jordanian dinar (JOD) in 360 days. The current spot rate of the dinar is $1.48, while the 360-day forward rate is $1.46. What is Pablo's cost from implementing a money market hedge (assume Pablo does not have any excess cash) ?

• A) $224,135.
• B) $226,269.
• C) $224,114.
• D) $223,212.

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Definitions:

Amortization

The process of gradually writing off the initial cost of an asset over a period, often used for intangible assets like patents and copyrights.

Bond Discount

The difference between the face value of a bond and the price for which it sells when the selling price is lower than its face value.

Indirect Method

A cash flow statement technique that starts with net income and adjusts for changes in balance sheet accounts to arrive at operating cash flow.

Capital Expenditures

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.