Max Co$.$ Inc., a U$.$S company, plans to use a money market to hedge its payment of $3,000,000$

Australian dollars for Australian goods in one year. The U$.$S interest rate is $7$ percent, while

the Australian interest rate is $12$ percent. The spot rate of the Australian dollar is $$0\mathrm{.}85,$ while

the one$-$year forward rate is $$0\mathrm{.}81.$

Required:

a$.$ Determine the amount of U$.$S$.$ dollars needed in one year if a money market hedge is

used.

b$.$ Using information in $($a$),$ would Max Co$.$ Inc. be better off hedging the payables with a

money market hedge or with a forward hedg