4) D-U Inc., an Australian manufacturer, is expecting an outflow of 83 million US-$ within the next four months. Today's spot exchange rate is 1.25 Australian dollars (AS) per US-S. D-U Inc. decides to hedge using options. The A$ interest rate is 5.79%. They contact Citi which offers the following options on the USS: a) American call on the US-S with T-3 months, K-1.25 AS/USS, price C-0.12AS/USS American put on the US-S with T-3 months, K-1.25 AS/USS, price P-0.10 A$/USS b) c) American call on the US-S with T-6 months, K-1.25 AS/USS, price C-0.14 d) A$/USS American put on the US-S with T-6 months, K= 1.25 AS/US$, price P-0.115 A$/USS Answer the following questions, assuming that these options have no resale value, and ignoring transactions costs. i) Which option should D-U Inc. choose? ii) Suppose that 3.5 months later (i.e., at the time when D-U Inc. will have to pay 83 million US-S) the spot exchange rate is 1.36 AS/US-S. What should D-U Inc. do? How much will D-U inc. have to pay, in terms of AS per US-$? iii) Now, suppose that at the time D-U Inc. will have to pay the 83 million US-S (i.e. 3.5 months later) the spot exchange rate is 1.19 AS/US-S. What should D- U Inc. do? How much will D-U Inc. pay in terms of A$ per US-$