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Global Distributors Inc. plans to make a payment of 1 , 5 0 0 , 0 0 0 to a supplier in Europe in 3

Global Distributors Inc. plans to make a payment of 1,500,000 to a supplier in Europe in 3 months. To protect against currency fluctuation, the company is considering entering into a forward rate agreement. The current EUR/USD spot exchange rate is 1.15, and the three-month forward rate offered by the bank is 1.17. If the spot rate at the time of transaction becomes 1.20, how much USD will Global Distributors save by entering into the forward rate agreement?
*A)* $37,500
*B)* $45,000
*C)* $75,000
*D)* None, it incurs a loss

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