Boisjoly watch imports has agreed to purchase 15000 swiss, Ask an Expert

Management Studies

Boisjoly Watch Imports has agreed to purchase 15,000 Swiss watches for 1 million francs at today's spot rate. The firm's financial manager, James Desreumaux, has noted the following current spot and forward rates:

	U.S. Dollar/Franc	Frans/U.S. Dollar
Spot	1.6590	0.6028
30-day forward	1.6540	0.6046
90-day forward	1.6460	0.6075
I80-day forward	1.6400	0.6098

On the same day, Desreumaux agrees to purchase 15,000 more watches in 3 months at the same price of 1 million francs.

a. What is the price of the watches, in U.S. dollars, if purchased at today's spot rate?

b. What is the cost, in dollars, of the second 15,000 batch if payment is made in 90 days and the spot rate at that time equals today's 90-day forward rate?

c. If the exchange rate for the Swiss franc is 0.50 to $1 in 90 days, how much will he have to pay for the watches (in dollars)?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M92177622

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