A U.S. Company expects to receive 100 million Russian Ruble 3 months from now. A call and put on Russian Ruble are available with a strike price of RR60/$ for each option, and a premium of 1.5% for the call option and a premium of 2.3% for the put option. The weighted average cost of capital (WACC) for the U.S. Company is 12% and the current spot rate is RR58.30/$.

a. If the company hedges in the option market, which option will it choose and what is the cost of option hedge today and at maturity in U.S. Dollars? Explain your answer very well

. b. If the spot rate at maturity is RR63/$, how much would the company receive (net) in 3 months from the option hedge?