General Electric Corporation $($GE$)$ has affiliates in more than $100$ countries around the world. The company has recently been concerned about the problem of meeting its accounts payable in euros. While GE has extensive business throughout Europe, it is worried about the specific transaction in which $50,000,000(50$ million$)$ is payable to a materials supplier in $180$ days $($six months$)$ from now. Using exchange and interest rate data, plus futures and options information below, what should GE do about its exchange risk?

Spot market: $ $0\mathrm{.}8614/$

$180-$day forward market contract: $ $0\mathrm{.}8563/$

$180-$day futures contract: $ $0\mathrm{.}8580/$

Size of one futures contract: $125,000$

$180-$day option contract: $ $0\mathrm{.}8550/,($option premium of $ $0\mathrm{.}0156/)$

Size of one option contract: $62,500$

$180-$day euro$-$deposit denominated in USD pays $2\mathrm{.}0225\%$ per year.

$180-$day euro$-$deposit in euros pays $3\mathrm{.}42225\%$ per year.

The commission for each futures contract is $$30\mathrm{.}00.$

The commission for each option contract is $$30\mathrm{.}00.$

The commission on a forward contract is $$400,$ for any amount.

All commissions and fees must be paid immediately $($now$)$ at the time of signing a contract.

Assumptions:

$1)$ GE has the necessary amount readily available now in US dollars and there is no opportunity cost associated with such funds.

$2)$ If we consider that GE has thousands of transactions denominated in euros taking place at the same time, no doubt that the net euro exposure will be a different amount. Then hedging this transaction may not seem useful. So$,$ we will assume that this is the only transaction for the firm.

$3)$ Also, assume that there is no bankruptcy risk or an operational risk $($counterpart risk$)$ to GE$.$

$1.$ Write down your final values for each alternative that you have suggested in your response to question $2.$ Select the best options as per your calculations