Car Corp (A U

Multiple Choice

Car Corp. (a U.S.-based company) sold parts to a Korean customer on December 16, 2011, with payment of 10 million Korean won to be received on January 15, 2012. The following exchange rates applied:

Assuming a forward contract was entered into, what would be the net impact on Car Corp.'s 2011 income statement related to this transaction? Assume an annual interest rate of 12% and a fair value hedge. The present value for one month at 12% is .9901.

A) $700 (gain) .
B) $700 (loss) .
C) $300 (gain) .
D) $300 (loss) .
E) $295 (gain) .