Hudson Valley Distributors Wants to Be Sure It Has 10,000

Hudson Valley Distributors wants to be sure it has 10,000 cases of Beaujolais Nouveau to sell next November.In January,they enters into an agreement to buy the wine at a price of 30 euros to the case.Payment will be due at the end of November.They expect to sell the wine to restaurants and retailers for $63 per case.If Hudson Valley does not hedge its position and the exchange rate in November is $1.50 /euro,what is the gross profit on the wine?

A) $180,000
B) ($180,000)
C) $330,000
D) $150,000

Correct Answer:

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