Kenya Trader Ltd. (KTC), a Kenyan firm has bought goods from a Tanzanian manufacturer and will pay Tsh. 800 million in four months time. The company wishes to hedge against the foreign exchange risk and is considering 4 methods. i) ii) Using a lead payment Using the forward exchange contract Using the money market hedge Using currency option. iv) Annual interest rates and foreign exchange rates are given below: Spot 4 month forward Ksh.1: Tsh. 20.75-20.75 15 - 10 cents premium 4 month Tsh 4 month Ksh. Borrowing Rate 18% 13% Deposit Rate 15% 10% A four month currency option to buy Tsh. 800 million at an exchange rate of Ksh. 1:Tsh. 20.25-20.75 is currently costing Ksh. 30,000. Required: Advice the company on the best method to use. (17 marks)