ERS Co has agreed to purchase 15,000 MTN modems for K1,350,000 at today's spot exchange rate. The Director in charge of purchasing has observed the following spot and forward exchange rates. Average spot exchange rates Currency Buying Selling

Kwacha per 1$ USD 17.4746 17.5246 Kwacha per 1 Euro 18.9180 18.9712

Kwacha per 1 rand (ZAR) 0.9913 0.9949

Average 90-day forward exchange rates Currency

Kwacha per 1$ USD 17.0362 Kwacha per 1 rand (ZAR) 0.8541 On the same day, the Director in charge of purchasing for ERS agreed to purchase 15,000 more MTN modems in 3 months at the same price of K1,350,000. Required: a) Calculate the cost of the first 15,000 Modems in Euro terms, if purchased at today's spot rate.b) Calculate the dollar cost of the second 15,000 Modems if payment is made in 3 months assuming that the spot rate at that time equals to today's 90-day forward rate.c) Determine the savings/extra cost of paying for the second batch of 15,000 modems in rands (ZAR) in 3 months based on the movement in the rand (Compare the spot with the forward rate).d) Recommend ANY TWO hedging methods that ERS can implement in their quest to manage currency risk. Justify the choice of the methods recommended.