Amount of yen payable = 8,000,000

Spot price (/$) = 108.20

Premium on call option, % = 2.500%

Cost of call option = $1,848.43

If the spot rate at end of 6-months is greater than strike rate, the option is exercised.

Possible Spot Rate in 180 days	Exercise Option?	Purchase price	Dollar cost of payable	Probability
101.35/$		108.00/$	$74,074.07	35%
105.44/$		108.00/$	$74,074.07	50%
110.21/$		110.21/$	$72,588.69	15%

Expected Cost:

Total cost of exercising call option on yen (including premium):

=