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Najafi Company. Najafi Company, U.S. based manufacturer of industriat equipment, just purchased a Korean compary that produces plastic nuts and bolts for heary equipment, the

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Najafi Company. Najafi Company, U.S. based manufacturer of industriat equipment, just purchased a Korean compary that produces plastic nuts and bolts for heary equipment, the purchase price was 8,100 million Korean won (KRW). KRW1,000 million has already been paid, and the remaining KRW7,100 melion is due in six months. The current spot rate is KRW1,102 = USD1 00 , and the 6-month forward rate is KRW1,175 = USO1 00. The 6-month Korean won interest fate is 16.5% per annum, the 6-month U.S. doblar rate is 5% per annum. Najaf can invest of these intertest rates. or borrow at 2% per annum above those rates. A G-month call option on won with a KRW1,200 = USD1.00 strike fale has a 4.4% premium, while the 6-month put option at the same strike rate has a 3.8% premiam. Najafis weighted average cost of caphtal is 11.5%. Compate alternate ways below that Najaf might deal with its foreign exichange exposure. a. How much in U.S. dollars wit Napafi pay in 6 months wathout a hedge it the expected spot rate in 6 months is assumed to be KRW1,102 = USD1 007 KRW1,175 = USOt,00? b. How much in U.S. dollars will Najaf pay in 6 months with a focward market hedge? c. How much in U.S. dollars will Najafi pay in 6 months with a money market hedge? d. How much in U.S. dollars will Najafi pay in 6 months with an opton hedge if the expected spot rate in 6 months is assumed to be less than KRW1,200 = USD 1.00? To be KRW1,300 = USD 1.00? e. What do you recommend? a. How much in U.S. dolars will Najaf pay in 6 mocths without a hedge it the expected spot rate in 6 months is assumed to be KRW1,102 = USD1 00 ? USC (Round to the nearest cent) How much in U.S. dollars wal Najafi pay in 60 months without a hedge if the expechod spot rate in 6 months is assumed to be KRW1, 175 = USD 00 ? uso (Round to the nearest cent.) b. How much in U.S. dollars will Najaff pay in 6 months wath a forward market hedgo? USD (Round to the nearest cent.) c. How much in U.S dolars will Najaff pay in 6 months with a money market hedge? UsC. (Round io the nearest cent) d. How much in U.S. dolars will Najaf pay in 6 months with an cotion hedge it the expected spot rate in 6 months is assunned to be less than KRW1,200 = USDT. 00 ? (Round to the nearost cent) How much in U.S: dolars will Nisjat pay in 6 months with an option hedge it the expected spot rate in 6 months is assumed to be KRW1,300 - USO 100 ? (Round to the nearest cemt.) 6. What do you recommend? (Select from the drop-down menus.) If the firm beleves the ending spot rate wil be a stronger Won, KFW1,200 - USD1,00 or lower, the provides the lowest certain cost hedging method for payment wil be a lower coul aternative

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