A U.S. firm has sold an Italian firm 1,000,000 worth of product. In one year theU.S. firm gets paid. To hedge, the U.S. firm bought put options on the euro with astrike price of $1.65. They paid an option premium $0.01 per euro. If the spotexchange rate is $1.60 at maturity, how much in dollar will the firm realize fromthe sale net of the cost of hedging?

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