1.) Illustrate the differences between the payments made on two different dates by calculating the required amount of Mexican peso.2.) Specifically recommend one payment date which is considered a more economical option for Emma.

Emma plans to import a car from England on 1 March 2017. Confronting with two alternatives, she has been making a decision regarding which date that her payment should be made.The first option is to convert her Mexican peso into ?100,000 and make a payment on 1 March 2017, with the expectation that Mexican peso would appreciate by 1.5% from 1 January 2017 to 1 March 2017.The second option is to sign the 90-day forward contract on 1 March 2017 to pay ?100,000 to the British seller. The 90-day forward rate, quoted in terms of Mexican peso value of British pound, is expected to be 33.557.

Foreign Exchange Cross Rates as of 1 January 2016 Hong Kong Dollar (1 HKD) Japanese Yen (1 JPY) Currency British Pound (1 GBP) Codes GBP HKD JPY MXN USD 12.1964 1.5727 Real interest rate in the U.K. Nominal interest rate in the U.K. Annual inflation rate in Mexico = 2.5% = 6% = 5.5% 0.0837 0.1369 1/92.6705 Mexican Peso (1 MXN) US Dollar (1 USD) 1/1.5727 92.6705