Embraer of Brazil. Embraer of Brazil is one of the two leading global manufacturers of regional jets $($Bombardier of Canada is the other$).$ Regional jets are smaller than the traditional civilian

airliners produced by Airbus and Boeing, seating between $50$ and $100$ people on average. Embraer has concluded an agreement with a regional U$.$S$.$ airline to produce and deliver four aircraft one

year from now for $$78$ million.

Although Embraer will be paid in U$.$S$.$ dollars, it also possesses a currency exposure of inputs$-$it must pay foreign suppliers $$17$ million for inputs one year from now $($but they will be delivering the

subcomponents throughout the year$).$ The current spot rate on the Brazilian real is $R$$$\frac{1\mathrm{.}8229}{\text{\$}},$ but it has been steadily appreciating against the U$.$S$.$ dollar over the past three years. Forward

contracts are difficult to acquire and are considered expensive. Citibank Brasil has not explicitly provided Embraer a forward rate quote, but has stated that it will probably be pricing a forward off the

current $3\mathrm{.}50\%$ U$.$S$.$ dollar eurocurrency rate and the $11\mathrm{.}00\%$ Brazilian government bond rate. Advise Embraer on its currency exposure.

How much of net cash position in Brazilian reais will Embraer receive in one year without a hedge if the expected spot rate in one year is expected to be $R$$$\frac{1\mathrm{.}8229}{\text{\$}}?$

$R$$$,($Round to the nearest whole number.$)$

How much in Brazilian reais will Embraer receive in one year if the net cash position is covered by a one$-$year forward contract?

$R$$$,($Round to the nearest whole number.$)$

$"$In this case because the real is selling forward at a considerable discount, the net long position$$if sold forward$$yields considerably more reais than the current spot rate."

The above statement is $.($Select from the drop$-$down menu.$)$