Cowboy Inc. a US-based manufacturer of heavy industrial equipment just purchased components for its manufacturing process for A$1,000,000 from a company in Australia. According to the terms of sale, Cowboy is allowed to make a payment in 180 days. You need to help Cowboy Inc. to explore different ways of hedging its accounts payable by using information below and make a decision.

Table #2

Current spot rate	A$1.2511/$
3-month forward rate	A$1.2564/$
6-month forward rate	A$1.2603/$
12-month forward rate	A$1.2782/$
180-day Investing rate in USA	3%
180-day borrowing rate in USA	4%
180-day investing rate in Australia	2%
180-day borrowing rate in Australia	3%
Bobcat's WACC	10%
Premium PUT option	3%
Premium CALL option	1%
CALL and PUT options strike price	A$1.3064/$

Use data from Table #2

Forward hedge (1)

a) Calculate the total payment in USD, if Cowboy hedges the contract using forward market hedge. Round your answer to the nearest dollar.

b)

Money market hedge (1)

Find the amount you need to borrow or invest today in Australian Dollars (A$). Round your answer to the nearest dollar.