Blunt Aesthetics is a U.S. fashion retailer which imports products from Europe. The company will need 100,000 euros () in one year to pay its Italian and French suppliers.

The firm expects the following exchange rate scenarios and probabilities:

Scenario	Spot rate in one year	Probability
A	$1.15	0.2
B	$1.2	0.4
C	$1.25	0.4

The spot rate is $1.2 per euro and the one-year forward rate is $1.202 per euro. The U.S. interest rate is 5% and the euro interest rate is 2%.

A call option on euros expiring in one year costs $0.044 per euro and has an strike price of $1.2 per euro.

Question:

What is the total cost of hedging your payables with a call option (in $)? Ignore the time value of money, i.e., the fact that the option premium has to be paid now rather than in a year.