(Answered) Forward market hedge to eliminate exchange rate risk

Finance

Problem: A US-based importer, makes a purchase of glassware from a firm in Germany for 39,960 marks or $24,000, at the spot rate of 1,665 marks per dollar. The terms of the purchase are net 90 days, and the US firm wants to cover this trade payable with a forward market hedge to eliminate its exchange rate risk. Suppose the firm completes a forward hedge at the 90-day forward rate of 1,682 marks. If the spot rate in 90 days is actually 1,638 marks, how much will the US firm have saved in US dollars by hedging its exchange rate exposure? Please explain your answer and also provide examples.

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