GED Corporation, Located in the United States, has an accounts payable obligation of 800 Million payable in one year to a bank in Tokyo. The current spot rate is 115/$1.00 and the one year forward rate is 110/1.00. The annual interest rate is 3 Percent in Japan and 6 Percent in the United States. GED can also buy a one-year call option on yen at the strike price of $0.0080 per yen for a premium of 0.010 cent per yen.

The future dollar cost of meeting this obligation using the forward hedge is?

The future dollar cost of meeting this obligation using the Money Market hedge is?

At what one-year spot rate would GED be indifferent between money market hedging and option market hedging?

a) 116.28/$1.00 b) This rate does not exist. c) 109/$1.00. d) 116/$1.00