On 1 June 2016, Mweyeji Ltd imported a consignment of goods from a supplier in the USA. The consignment cost $1,000 and was payable on 1 September 2016.

The spot rates on 1 June and 1 September 2016 were as follows:

	$/Sh.
1 June	0.007
1 September	0.006

In September 2016 shilling futures were trading at $0.00625/Sh (contract size Sh.1, 194,000) as at 1 June 2016.

Required:

1. Show how Mwenyeji Ltd could have used a futures contract as a hedging tool, indicating any hedging profit or loss. (6 Marks)
2. How many futures contracts would Mwenyeji Ltd. have purchased if the contract size was Sh.2 million?

(2 Marks)