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Micca Metals, Inc. Micca Metals, Inc. is a specialty materials and metals company located in Detroit, Michigan. The company specializes in specific precious metals and

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Micca Metals, Inc. Micca Metals, Inc. is a specialty materials and metals company located in Detroit, Michigan. The company specializes in specific precious metals and materials that are used in a variety of plement applications in many industries including cosmetics, applances, and a variety of high tinsel metal fabricating equipment. Micca just purchased a shipment of phosphates from Morocco for 7,000,000 dirhams, payable in six months. Sex-month call options on 7,000,000 dirhams at an exercise price of 10.60 dirhams per dollar are available from Bank AMaghrub at a premium of 1.9%. Six-month put options on 7,000,000 dirhams at an exercise price of 10.60 dirhams per dollar are available at a premium of 3.1%. Using the exchange rate and interest rate data in the popup window, compare alternate ways below that Micca might hedge its foreign exchange transaction exposure a. How much in U.S. dollars will Micca pay in 6 months without a hedge if the expected spot rate in 6 months is assumed to be 10.60 dirhams per dolar? 11.20 dirhams per dollar b. How much in U.S. dollars will Micca pay in 6 months with a forward market hedge? c. How much in U.S. dollars will Micca pay in 6 months with a money market hedge? d. How much in US dollars will Micca pay in 6 months with an option hedge if the expected spot rate in 6 months is assumed to be less than 10.60 dirhams per dollar? e. What is your recommendation? a. How much in US dollart will Micca pay in 6 months without a hedge if the expected spot rate in 6 months is assumed to be 10.60 dirhams per dollar? (Round to the nearest cent.) rer X fate Data table tha th Assumptions Values Shipment of phosphates from Morocco, Moroccan dirhams 7,000,000 Micca's cost of capital (WACC) 14.00% Spot exchange rate, dirhams/$ 10.60 6-month forward rate, dirhams/$ 11.20 6-month interest rate for borrowing, Morocco (per annum) 10.00% 6-month interest rate for investing, Morocco (per annum) 9.00% 6-month interest rate for borrowing, U.S. (per annum) 8.00% 6-month interest rate for investing, U.S. (per annum) 7.00% Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet. tha Print Done

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