Bobcat, a U.S.-based manufacturer of industrial equipment, just purchased a Korean company that produces plastic nuts and bolts for heavy equipment. The purchase price was Won7,800 million. Won1,500 million has already been paid, and the remaining Won6,300 million is due in six months. The current spot rate is Won1,071.95/$, and the 6-month forward rate is Won1,103.28/$. A 6-month call option on won with a Won1,100/$ strike rate has a 2.83% premium, while the 6-month put option at the same strike rate has a 2.48% premium. Bobcats weighted average cost of capital is 9%. Compare alternate ways that Bobcat might deal with its foreign exchange exposure. What do you recommend and why

Assumptions Values Purchase price of Korean manufacturer (KRW) 7,800,000,000 Less: Initial payment (KRW) 1,500,000,000 Net settlement needed (KRW), in six months 6,300,000,000 Current spot rate (KRW/USD) 1,071.95 Six month forward rate (KRW/USD) 1,103.28 Bobcat's cost of capital (WACC) 9.00% Options on KRW Call Option Put Option Strike price (KRW/USD) 1,100.00 1,100.00 Option premium (percent) 2.83% 2.48%