Assuming a forward contract to sell 100,000 Israeli shekels was entered into on December 1, Year 1,.
Assuming a forward contract to sell 100,000 Israeli shekels was entered into on December 1, Year 1, as a fair value hedge of a foreign currency receivable, what would be the net impact on net income in Year 1 resulting from a fluctuation in the value of the shekel? a. No impact on net income. b. A $58.80 decrease in net income. c. A $2,000 decrease in income. d. A $911.80 increase in income. Reiter Corp. (a U.S.-based company) sold parts to an Israeli customer on December 1, Year 1, with payment of 100,000 Israeli shekels to be received on March 31, Year 2. The following exchange rates apply: Reiter’s incremental borrowing rate is 12 percent. The present value factor for three months at an annual interest rate of 12 percent (1 percent per month) is 0.9706. View Solution:
Assuming a forward contract to sell 100 000 Israeli shekels was
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