On 4/1/18, a U Discount Rate Is 12

Multiple Choice

On 4/1/18, a U.S.Company commits to sell a piece of equipment to a French customer.At that time, the U.S.company enters into a forward contract to sell foreign currency on 8/1/18 (120 days) .Delivery will take place 7/1/18 with payment due on 8/1/18.The fiscal year end for the company is 6/30/18.The sales price of the equipment is 200,000 Euros.Various exchange rates are as follows: ?

$$\begin{array} { l r r } & \text { Spot } & \text { Forward } \\\hline 4 / 1 / 18 & 1 \mathrm { FC } = \$ 0.60 & 1 \mathrm { FC } = \$ 0.58 \\6 / 30 / 18 \text { and } 7 / 1 / 18 & 1 \mathrm { FC } = \$ 0.58 & 1 \mathrm { FC } = \$ 0.56 \\8 / 1 / 18 & 1 \mathrm { FC } = \$ 0.55 & 1 \mathrm { FC } = \$ 0.55\end{array}$$ Discount rate is 12%.What is the value of Forward Contract on 6/30?

A) 4,000 debit
B) 3,960 debit
C) 4,000 credit
D) 3,960 credit