A foreign company buys industrial machinery from a U.S. company at a price of $10 million. The machinery will be delivered and paid for in six months. The foreign company seeks to establish its costs in FCs. It decides to use the forward market to accomplish its objective. The company contacts its bank, which provides the following quotations:

The bank states that it will charge a commission of .25% on any transaction.
(a) Does the foreign company enter the forward market to go long or short forward dollars?
(b) What is the equilibrium forward rate for the foreign currency expressed as $/FC?
(c) Does the commission increase or decrease the dollar value of the foreign currency?
(d) What price in foreign currency units can the foreign company establish by using the forward market in dollars?

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FC Six-month rates 8% 9% Spot exchange rates 2.041CS $049/FC