Use the following information for problems 9 and 10: On November
Use the following information for problems 9 and 10: On November 1, Year 1, Black Lion Company forecasts the purchase of raw materials from an Argentinian supplier on February 1, Year 2, at a price of 200,000 Argentinian pesos. On November 1, Year 1, Black Lion pays $1,200 for a three-month call option on 200,000 Argentinian pesos with a strike price of $0.35 per peso. The option is properly designated as a cash flow hedge of a forecasted foreign cur- rency transaction. On December 31, Year 1, the option has a fair value of $900. The following spot exchange rates apply:,
Date U.S. Dollar per Argentinian Peso,
November 1, Year 1 . . . . . . . . . $0.35,
December 31, Year 1 . . . . . . . . 0.3,
February 1, Year 2 . . . . . . . . . . 0.36,
9. What is the net impact on Black Lion Company?s Year 1 net income as a result of this hedge of a forecasted foreign currency purchase? ,
b. A $200 increase in net income.,
c. A $300 decrease in net income. ,
d. An $800 decrease in net income.,
10. What is the net impact on Black Lion Company?s Year 2 net income as a result of this hedge of a forecast foreign currency purchase? Assume that the raw materials are consumed and become a part of cost of goods sold in Year 2.,
a. A $70,000 decrease in net income.,
b. A $70,900 decease in net income. ,
c. A $71,100 decrease in net income. ,
d. A $72,900 decrease in net income.
This question was answered on: Dec 18, 2020
Buy this answer for only: $18.50
This attachment is locked
We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy (Deadline assured. Flexible pricing. TurnItIn Report provided)
Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
About this QuestionSTATUS
Dec 18, 2020EXPERT
GET INSTANT HELP/h4>
We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.
You can also use these solutions:
- As a reference for in-depth understanding of the subject.
- As a source of ideas / reasoning for your own research (if properly referenced)
- For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
NEW ASSIGNMENT HELP?
Order New Solution. Quick Turnaround
Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.
WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN YOUR SET DEADLINE.