Boeing just signed a contract to sell a boeing 737 aircraft to air france. air france will be billed €20 million payable in one year. the current spot exchange rate is $1.05/€ and the one-year forward rate is $1.10/€. interest rate is 6.0% per annum in the u. s. and 5.0% per annum in france. boeing is concerned with the volatile exchange rate between the dollar and the euro and would like to hedge its foreign currency exposure.

Lusk corporation produces and sells 14,300 units of product x each month. the selling price of product x is $25 per unit, and variable expenses are $19 per unit. a study has been made concerning whether product x should be discontinued. the study shows that $72,000 of the $102,000 in monthly fixed expenses charged to product x would not be avoidable even if the product was discontinued. if product x is discontinued, the annual financial advantage (disadvantage) for the company of eliminating this product should be: