1.An Australian exporter WA Co. will receive 5.75 million Chinese yuan (CNY) from a Chinese importer Sing Tao in one year. WA Co. analyses the different hedging strategies (forward, money market and options) using the market information in the following Table 1 to minimize its exchange rate risk for the Australian dollar (A$) cash flow.

After analyzing the different hedging strategies,WA Co. found that none of these hedging strategies (forward, money market and options) provides the expected A$ proceedsand wants to receive A$ rather than CNY in one year.Therefore, WA Co. proposed Sing Tao to pay WA Co. A$2.09 million instead of the initial an agreed amount of CNY5.75 million.As an importer before signing a new agreement, Sing Tao analyses the different hedging strategies using the market information in Table 1 to minimise its exchange rate risk for the payment of A$2.09 million.

Calculate the maximum CNY costs for the options hedging strategy using the information in Table 1.