Calculating the cost of a forward contract. A U.S. multinational (Google) hired an Indian consulting firm to upgrade its internal communications network. In six months when the contract is over, Google will need 75,400,000 Indian rupees to pay the consultants. The company needs to decide whether or not to it should enter into a forward contract to hedge its exchange rate risk.

1. What is the Indian rupee spot rate?
2. What is the Indian rupee 6-month forward rate?
3. What will it cost Google if the company purchases the Indian rupee at the spot rate?
4. What would it cost Google if it hedged its currency exposure by purchasing a 6-month forward contract?