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2. Bobcat Company. Bobcat Company, U.S.-based manufacturer of industrial equipment, just purchased a Korean company that produces plastic nuts and bolts for heavy equipment. The

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2. Bobcat Company. Bobcat Company, U.S.-based manufacturer of industrial equipment, just purchased a Korean company that produces plastic nuts and bolts for heavy equipment. The purchase price was W7,500 million. W1,000 million has already been paid, and the remaining W6,500 million is due in six months. The current spot rate is W1,110/$, and the 6-month forward rate is W1,175/$. The 6-month Korean won interest rate is 16% per annum, the 6-month U.S. dollar rate is 4% per annum. Bobcat can invest at these interest rates, or borrow at 2% per annum above those rates. A 6-month call option on won with a W1,200/$ strike rate has a 3.0% premium, while the 6-month put option at the same strike rate has a 2.4% premium. Bobcat can invest at the rates given above, or borrow at 2% per annum above those rates. Bobcat's weighted average cost of capital is 10%. Compare alternate ways that Bobcat might deal with its for- eign exchange exposure. What do you recommend and why

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