After calculating its dollar cost of forward hedging, Mullen is now considering a money market hedge on the 300,000 pound payable. In particular, Mullen can earn 5.00% over the next year by depositing pounds in a British bank today. Suppose that the spot rate for the pound today is $1.18.

In order to have 300,000 euros in one year, Mullen would only need to deposit approximately ______ pounds. In order to get that amount of pounds, assuming a spot rate for the pound of $1.18, Mullen would only need approximately _______.

Mullen does not wish to use its own cash balances for this hedge, so it will need to borrow dollars at a rate of 8.00%.

If Mullen borrows these dollars, it will need to repay approximately _______.

1st blank options:

a.) 228,571.43

b.) 257,142.86

c.) 285,715.29

d.) 200,000

blank 2 options:

a.)$269,714.29

b.)$370,857.15

c.)$337,142.86

d.)$303,428.57

Blank 3 options:

a.)$254,880.00

b.)$364,114.29

c.)$473,348.58

d.)436,937.15