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Business, 23.10.2019 18:00 graymonky12

On november 1, year 1, black lion company forecasts the purchase of raw materials from an argentinian supplier on february 1, year 2, at a price of 200,000 argentinian pesos. on november 1, year 1, black lion pays $1,200 for a three-month call option on 200,000 argentinian pesos with a strike price of $0.35 per peso. the option is properly designated as a cash flow hedge of a forecasted foreign currency transaction. on december 31, year 1, the option has a fair value of $900. the following spot exchange rates apply: date u. s. dollar per argentinian peso november 1, year 1 $ 0.35 december 31, year 1 0.30 february 1, year 2 0.36 what is the net impact on black lion company’s year 1 net income as a result of this hedge of a forecasted foreign currency purchase?

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