1. **Problem Statement:** Elan, a multinational pharmaceutical company, is evaluating an export sale of 1,630 million Indonesian rupiah (Rp). The current spot exchange 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 a hedge 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 = Rp9450/$** Calculate the USD amount: $$\frac{1,630,000,000}{9,450} = 172,486.77$$ So, Elan will receive $172,486.77 without a hedge. 4. **Part 2: Expected spot rate in 90 days = Rp10,230/$** Calculate the USD amount: $$\frac{1,630,000,000}{10,230} \approx 159,335.29$$ So, Elan will receive approximately $159,335.29 without a hedge. 5. **Part 3: Expected spot rate in 90 days = Rp9920/$** Calculate the USD amount: $$\frac{1,630,000,000}{9,920} \approx 164,315.73$$ So, Elan will receive approximately $164,315.73 without a hedge. 6. **Interpretation:** - If the rupiah weakens (lower Rp/USD), Elan receives more USD. - If the rupiah strengthens (higher Rp/USD), Elan receives fewer USD. - The forward rate of Rp9920/$ locks in $164,315.73, which is less than the current spot conversion but protects against currency risk. **Final answers:** - Part 1: $172,486.77 - Part 2: $159,335.29 - Part 3: $164,315.73