(3) Foreign Currency Options nge Risk (3.A) Put Options - Firm Commitment (options to sell foreign currency) On October 1, 2021, ABC, a US company, received an order to sell a machine to a customer in Canada at a price of 500,000 CAD. The machine was shipped and payment was received on March 1, 2022. On October 1, 2021, ABC Company purchased a put option giving the right to sell 500,000 CAD on March 1, 2022 at a price of 400,000 USD. The strike price was set exactly the same as the spot exchange rate on October 1, 2021 (strike price is: .80 USD per CAD). The US Company properly designates the option as a fair value hedge of the Canadian-Dollar firm commitment. The option did cost the company/2.000 USD, and had a fair value of 4,600 USD on December 31, 2021. The following spot exchange rates apply: Date October 1, 2021 December 31, 2021 March 1, 2022 USD per Canadian Dollar (CAD) .80 .78 74 ABC incremental borrowing rate is 11% and the present value factor for 3-month is .9600. Required: 1. Determine the net impact on ABC Company's 2021 income of this fair value hedge of a firm commitment. 7.80-78) X 500.000 x