General Electric (GE) imported a manufacturing system from Mitsubishi Heavy Industry for 50 million payable in one year. The current spot rate is $.0091/ and the one-year forward rate is $.0088/. The annual interest rate is 4% in Japan and 6% in the U.S. GE can also buy a one-year call option on yen at the strike price of $.0086 per yen for a premium of $0.00014 per yen. Answer the following questions. You can write out your final answers only or show a short calculation.

A. Compute the future dollar costs of meeting this obligation using forward hedge.

B. Compute the future dollar costs of meeting this obligation using money market hedge.

C. Assuming that the forward exchange rate is the best predictor of the future spot rate, compute the expected future dollar cost of meeting this obligation if GE decides NOT to hedge?