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Based on the material in the course and other research which you conduct

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Based on the material in the course and other research which you conduct, answer the questionsshown below after the data on Jones Company. If you use additional sources of information fromoutside the course, be sure to identify those sources.Jones Company is a U.S. firm preparing its financial plan for the next year. It has no foreignsubsidiaries, but it has extensive exports to Australia, Canada, Argentina and Taiwan. Itsestimated foreign cash inflows to be received from exports and cash outflows to be paid forimports over the next year are shown below:CurrencyTotal InflowTotal OutflowAustralia dollars (A$)A$33,000,000A$3,000,000Canada dollars (C$)C$6,000,000C$2,000,000Argentina pesos (AP)AP12,000,000AP11,000,000Taiwan dollars (T$)T$5,000,000T$9,000,000The spot rates and one-year forward rates as of today are:CurrencySpotRateOne-Year Forward RateA$$ .91$ .94C$.61.60AP.19.16T$.66.651.Based on the above, calculate the net foreign exchange exposure Jones faces for eachforeigncurrency stated in dollars.2.The current spot rate is used by Jones as a forecast of the future spot rate one year intothe future. The C$, AP, and T$ are expected to move together against the U.S. dollarduring the next year. The A$’s movements are expected to be independent of themovements of the other currencies. As exchange rates are difficult to predict, theforecasted net dollar cash flows per currency may be inaccurate. Could there beoffsetting exchange rate movements from whatever exchange ratemovements do occur? Explain.
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