GE has a loan payment in the amount of 2,000,000 due in 6-months to a French bank. They also wish against exchange rate risk in this transaction and the market rates are below:

Spot rate =$1.30/, Forward rate 180-days=$1.28/, interest ($) =2.00% for 6-months, interest ()=2.50% for 6-months

What is the cost to GE if they conduct a forward hedge?

Now, suppose there is a call option available to GE to hedge the transaction risk in the above problem. The exercise price of this option is $1.50/ and the premium is $.02/.

What is the worst-case scenario outcome if GE chooses the call option?