Bobcat company, 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 Won$7,500$ million. Won$1,000$ million has already been paid, and the remaining Won$6,500$ million is due in six months. The current spot rate is Won$1,110/$$$,$ and the $6-$month forward rate is Won$1,175/$$$.$ The $6-$month Korean won interest rate is $16\%$ per annum, and the $6-$ month U$.$S$.$ dollar interest rate is $4\%$ per annum. Bobcat can invest at these interest rates, or borrow at $2\%$ per annum above those rates. A $6-$month call option on won with a Won$1,200/$$ strike price has a $3\mathrm{.}0\%$ premium, while the $6-$month put option on won at the same strike price has a $2\mathrm{.}4\%$ premium.

Bobcat can invest at the rates given above, or borrow at $2\%$ per annum above those rates. Bobcat$$s weighted average cost of capital is $10\%.$ Compare alternate ways that Bobcat might deal with its foreign exchange exposure. What do you recommend and why?