Kansas Corporation, an American company, has a payment of 6.2 million due to Tuscany Corporation one year from today. At the prevailing spot rate of 0.90 /$, this would cost Kansas $6,888,889, but Kansas faces the risk that the /$ rate will fall in the coming year, so that it will end up paying a higher amount in dollar terms. To hedge this risk, Kansas has two possible strategies. Strategy 1 is to buy 6.2 million forward today at a one-year forward rate of 0.89 /$. Strategy 2 is to pay a premium of $112,000 for a one-year call option on 6.2 million at an exchange rate of 0.88 /$. Suppose that in one year the spot exchange rate is 0.85 /$.

1. What would be Kansas's net dollar cost for the payable under each strategy?

Note: Round your answer to the nearest whole dollar amount.

Net Dollar Cost

Strategy 1 $696,629 (I believe this $ amount is correct)

Strategy 2 ?

2. Suppose that in one year the spot exchange rate is 0.95 /$. What would be Kansas's net dollar cost for the payable under each strategy?

Note: Round your answer to the nearest whole dollar amount.

Net Dollar Cost

Strategy 1 $636,629 (I believe this $ amount is correct)

Strategy 2 ?