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Question Walter Kurtz Corporation, located in the United States, has an accounts payable obligation of JPY 750,000,000 payable in one year to a company located in Tokyo. The current spot rate is JPY 116 / USD and the one year forward rate is JPY 109 / USD. The annual interest rate is 3 percent in Japan and 6 percent in the United States. The future cost in USD of meeting this obligation using the forward hedge is:

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Question

Walter Kurtz Corporation, located in the United States, has an accounts payable obligation of JPY 750,000,000

payable in one year to a company located in Tokyo. The current spot rate is JPY 116 / USD and the one year forward rate is JPY 109 / USD. The annual interest rate is 3 percent in Japan and 6 percent in the United States.  The future cost in USD of meeting this obligation using the forward hedge is:

 
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