Farah Jeans. Farah Jeans of San Antonio, Texas, is completing a new assembly plant near Guatemala City. A final construction payment of Q8,900,000 is due in six months. ("Q" is the symbol for Guatemalan quetzals.) Farah uses 17.00% per annum as its weighted average cost of capital. Today's foreign exchange and interest rate quotations are as follows: Farah's treasury manager, concerned about the Guatemalan economy, wonders if Farah should be hedging its foreign exchange risk. The manager's own forecast is as follows: a. How much in U.S. dollars will Farah Jeans pay in 6 months without a hedge if the expected spot rate in 6 months is Q8.04/\$? Q7.29/\$? Q6.37/\$? b. How much in U.S. dollars will Farah Jeans pay in 6 months with a forward market hedge? c. How much in U.S. dollars will Farah Jeans pay in 6 months with a money market hedge? d. Which method would you select and why? \begin{tabular}{lr} \hline Construction payment due in 6 months (AVP, quetzals) & 8,900,000 \\ Present spot rate (quetzals/\$) & 6.88 \\ 6-month forward rate (quetzals/\$) & 7.06 \\ Guatemalan 6-month interest rate (per annum) & 15.00% \\ U.S. dollar 6-month interest rate (per annum) & 7.00% \\ Farah's weighted average cost of capital (WACC) & 17.00% \\ \hline Click on the icon located on the top-right corner of the data table in order \\ to copy its contents into a spreadsheet. \end{tabular} Data table