Weyerhauser is a U.S based forest products firm.
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Weyerhauser is a U.S based forest products firm. In June Weyerhauser delivers a shipment of raw lumber to Japan. The y55,000,000 receivables is due 180 days. The firm's foreign exchange advisors believe the yen will be at about y115/$ then, Current spot rate is y110/$ Weyerhauser has received 180 day forward quote of y108/$. If the company does nothing and the exchange rate goes to y115 as expected. How much will the firm receive in dollars in 180 days? Is this cash flow risky or known with certainly today?
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This solution is comprised of a detailed explanation and calculation to answer the effect of the exchange rate on Weyerhauser's receivables.
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Weyerhauser is a U.S based forest products firm. In June Weyerhauser delivers a shipment of raw lumber to Japan. The y55,000,000 receivables is due 180 days. The firm's foreign exchange advisors believe the yen will be at about y115/$ then, Current spot rate is y110/$ Weyerhauser has received 180 day forward quote of y108/$. If the company does nothing and the exchange rate goes to y115 as expected. How much will ...
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