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Lumo, an Australian energy company, has issued an invoiced to its British customer for 2,500,000 GBP of goods. This invoice is payable in one year

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Lumo, an Australian energy company, has issued an invoiced to its British customer for 2,500,000 GBP of goods. This invoice is payable in one year to Lumo. The current spot rate is 1.9805 AUD/GBP and the one year forward rate is 1.9700 AUD/EUR. The annual interest rate is 5% in the UK and 3.5% in Australia. The company can also use options on EUR at the strike price of 1.9710 AUD/GBP for a premium of 0.065 AUD/GBP. Suppose the future exchange rate is 1.9695 AUD/EUR. The AUD outcome of using the money market hedge for this transaction is 0 Select one: a $4,715,476.19 b. $4,925,000.00 c. $4,951,250,00 d. none of the options e $4,880,517.86 0

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