A couple is going to Zurich, Switzerland in 3 months for a vacation. They expect to incur a total cost of SF 5,320 for lodging, meals, uber, etc. As of today the spot exchange rate is $0.62/SF and the three month forward rate is $0.67/SF . You can buy the three-month call option on SF with an exercise price of $0.68/SF for the premium of $0.05/SF . Assume that your expected future spot exchange rate is as the same as the forward rate. The three month interest rate is 8% per year in the US and 4% per year in Switzerland.

a.) calculate the couple's expected dollar cost of buying SF 5320 if you chose to hedge on a call option on SF (show work)

b.) calculate the couple's future dollar cost of meeting the SF obligation if they chose to hedge using a forward contract.

c.)at what future spot exchange rate would the travelers be indifferent between the forward and option market hedge? (show work)