KL Design (KLD) is a clothing company that produces high quality apparel and exports them to the United States (US). In order to maintain the quality of its products, it imports high quality textiles that include silk, wool and linen fabrics from the supplier in the United Kingdom (UK). Sales and purchases are denominated in US dollar and British pound, respectively. KLD normally would request its bank to convert the US dollar received from the sales to Malaysian ringgit at the prevailing spot exchange rate when the customer made payment directly into its account. Similarly, KLD would also request its bank to convert ringgit to British pounds at prevailing spot exchange rate when making payments to the supplier in the UK. KLD expects to receive US$200,000 in March 2022 from the customer in the US. Also, it expects to make payment amounted to 40,000 to the supplier in the UK in March 2022. For the past few months, the value of Malaysian ringgit has been volatile against the US dollar and the British pound. This has been due to uncertain economic condition in Malaysia during the Covid-19 pandemic. The trend is expected to last until the end of first quarter of 2022. Because of the current situation, KLD is considering the possibility to use forward contract to hedge the foreign currency receivable and payable, and has asked its bank to provide the relevant exchange rates. Its bank quoted the following exchange rates. Spot rate Three-month forward rate UK RM5.741/ RM5.726/ (a) KLD, however, is sceptical as to whether the forward rates quoted by the bank are reasonable given the prevailing spot rates. It has then managed to obtain the following information. US RM4.172/US$ RM4.232/US$ 1% LUK Malaysia Three-month interest rate 2% 2.27% 1.75% Inflation rate over the three- month period 1.5% 1.25% Upon checking the information, KLD is concerned with the inflation rate in the UK as it is on the high side. High inflation rate in the UK may have effect on the cost of textiles imported from the supplier in the UK. The increase in the price of textiles would affect the cost of production and hence would reduce its profit. REQUIRED: Compute the amount in ringgit that KDL would receive from the customer in the US and the amount in ringgit to pay to supplier in the UK in March 2022 if it does not hedge the foreign currency receivable and the foreign currency payable. (10 Marks)