1. **Problem Statement:** Elan, a multinational pharmaceutical company, is evaluating an export sale of 1,630 million Indonesian rupiah (Rp). The current spot rate is Rp9450/$, and the 90-day forward rate is Rp9920/$. The company wants to analyze how much it will receive in U.S. dollars in 90 days without hedging under different expected spot rates. 2. **Formula Used:** To convert rupiah to U.S. dollars, use the formula: $$\text{USD amount} = \frac{\text{Rupiah amount}}{\text{Exchange rate (Rp/USD)}}$$ 3. **Part 1: Expected spot rate in 90 days is Rp9450/$** Calculate the USD amount: $$\frac{1,630,000,000}{9,450} = 172,486.77$$ So, Elan will receive **$172,486.77** without a hedge. 4. **Part 2: Expected spot rate in 90 days is Rp10,230/$** Calculate the USD amount: $$\frac{1,630,000,000}{10,230} \approx 159,335.29$$ So, Elan will receive **$159,335.29** without a hedge. 5. **Part 3: Expected spot rate in 90 days is Rp9920/$** Calculate the USD amount: $$\frac{1,630,000,000}{9,920} \approx 164,112.90$$ So, Elan will receive **$164,112.90** without a hedge. 6. **Summary:** - If the rupiah stays at Rp9450/$, Elan receives $172,486.77. - If the rupiah strengthens to Rp10,230/$, Elan receives less: $159,335.29. - If the rupiah moves to the forward rate Rp9920/$, Elan receives $164,112.90. This analysis helps Elan decide whether to hedge using the forward contract or take the risk of currency fluctuations.