Hi! I think that the below Kaplan kit answer is wrong, can u pls check?
Q)
Plum Co, a company based in Japan, has entered into a contract with a New Zealand
company to purchase an item of machinery. The cost in New Zealand dollars, is NZD
400,000 and is due to be paid in six months. Plum Co decides to enter into a forward
exchange contract with its bank, who has offered a contract at the following six?month
rates:
Japanese yen 77.2 – 78.2 = 1 New Zealand dollar
Calculate, to the nearest dollar, the value of New Zealand dollars that would be needed
to settle the purchase invoice if the forward exchange contract is used.
____________ NZD
Ans) 5,181 NZD
Ask the Tutor ACCA FM
Risk management
5y ago#1Given that the cost is NZD 400,000, the amount needed to pay the invoice is NZD 400,000 !!
The answer would only be 5,181 NZD if the New Zealand company was buying from Japan and the cost was 400,000 Japanese Yen.
Thanks for the clarification, that's Exactly what I thought.
5y ago#3You are welcome :-)
This topic is locked — no new replies.