Assume the following information:

90-day U.S. interest rate	3	%
90-day Malaysian interest rate	4	%
90-day forward rate of Malaysian ringgit	$0.364
Spot rate of Malaysian ringgit	$0.374

Assume that the Santa Barbara Co. in the United States will need 100,000 ringgit in 90 days. It wishes to hedge this payables position. Would it be better off using a forward hedge or a money market hedge? Substantiate your answer with estimated costs for each type of hedge. Do not round intermediate calculations. Round your answers to the nearest dollar.

The firm will pay out $ in 90 days if it uses the forward hedge and $ if it uses the money market hedge. Thus, it should use the -Select-forwardmoney marketItem 3 hedge.