On 6/1/X2, an American Firm Purchased a Inventory Costing 100,000

Multiple Choice

On 6/1/X2, an American firm purchased a inventory costing 100,000 Canadian Dollars from a Canadian firm to be paid for on 8/1/X2. Also on 6/1/X2, the American firm entered into a forward contract to purchase 100,000 Canadian dollars for delivery on 8/1/X2. The exchange rates were as follows: The American firm's fiscal year end is 6/30/X2. The changes in the value of the forward contract should be discounted at 8%. What is the recorded value of the Forward Contract on 6/1/X2?

A) $73,000
B) $74,000
C) $68,000
D) $0