Orlando Transportation Inc.. (OTI)) , an American company, has just signed a contract to purchase light rail cars from a manufacturer in Germany for 2,500,000. The purchase was made in June with payment due six months later in December. To help the firm make a hedging decision you have gathered the following information.. The spot exchange rate is $1.40/euro The six month forward rate is $1.38/euro OTI's cost of capital is 11% The annualized Euro 6 - month borrowing rate is 9% (or 4.5% for 6 months) The annualized Euro 6 - month lending rate is 7%(or 3.5% for 6 months) The annualized US 6 - month borrowing rate is 8% (or 4% for 6 months) The annualized US 6 - month lending rate is 6% (or 3% for 6 months) December call options for euro 625,000; strike price $1.42 premium price is 1.5% Question A) What is the cost of a call option hedge for OTI's euro payable contract?? (Note: Calculate the cost in future value dollars and assume the firm's cost of capital as the appropriate interest rate for calculating future values.)

a) $52,500.00 b) $55,387.50 c) $56,125.00 d) $58,275.00