A U.S. firm exports machine tools a French heavy industry firm. The U.S. firm will receive payment of 1,000,000 in one year. The U.S. firm has decided to hedge this transaction by purchasing a put option on the euro with a strike price of $1.68/1. The cost of this put option was $0.02 per euro. Suppose the spot rate at maturity is $1.60/1. How much will the U.S. firm profit by hedging this transactions? Assume an annual risk-free interest rate of 5.0%.

• $92,000

• $38,000

• None of the options.

• $59,000

• $80,000