A U.S. company sells products to a Dutch company and will receive payment of €550,000 in three months. At the time of sale, the spot rate of the euro was $1.25, and the 90-day forward rate was $1.21. At the time of sale, the U.S. company negotiated a forward contract with a bank to sell €550,000 forward in three months. The spot rate of the euro on 9/1 is $1.28. What amount in $ will the US Company receive?

To calculate the amount in dollars that the U.S. company will receive, we need to consider the forward contract and the spot rate of the euro on the settlement date.

1. Calculate the forward contract rate:
The U.S. company negotiated a forward contract to sell €550,000 forward in three months at a rate of $1.21. This means that they agreed to sell €550,000 at a rate of $1.21 per euro.

2. Calculate the amount in dollars using the forward contract rate:
€550,000 x $1.21 = $665,500

3. Determine the spot rate on the settlement date:
The spot rate of the euro on the settlement date, 9/1, is $1.28.

4. Calculate the amount in dollars using the spot rate:
€550,000 x $1.28 = $704,000

5. Compare the amounts:
Since the spot rate of $1.28 is higher than the forward contract rate of $1.21, the U.S. company will receive the higher amount. Therefore, the U.S. company will receive $704,000.