Assume your company, located in the United States, has a contract to purchase 100,000 computers from a Korean company. The payment is due on receipt of the shipment and must be delivered in Korea on December 31, 2021. In July 2021, when you are arranging the contract, the computers are priced at 500,000 won each. The spot rate in July 2021 is $1 in exchange for 1,250 won.

(i) What is the total cost of the computers in won? (2 points)

(ii) What is the total cost of the computers in dollars? (2 points)

(iii) What would you advise your firm to do to avoid a loss on the deal if the Korean won costs 10% more compared with the U.S. dollar when payment is due in December? (4 points)