In 1996 DEC hedges a FF 32 million receivable due in 180 day

In 1996, DEC hedges a FF 3.2 million receivable due in 180 days. The current spot rate is FF 1 = $0.1873-88 and the 180day forward rate is FF 1 = $0.1862-69. If the spot rate at the end of 180 days is $0.1879-95, how much has the forward market hedge cost DEC? If instead of AR, DEC has an AP of FF 3.2 million due in 180 days, how much will the forward hedge cost (benefit) it?

Solution

case 1: DEC has AR (Exporter)

case 2: DEC has AP (Importer)