Palmer Corporation, operating as a U.S. corporation, expects to order goods from a foreign supplier at a price of 432,000 pounds, with delivery and payment to be made on April 15. On January 15, Palmer purchased a three-month call option on 432,000 pounds and designated this option as a cash flow hedge of a forecasted foreign currency transaction. The option has a strike price of $0.20 per pound and costs $4,320. The spot rate for pounds is $0.20 on January 15 and $0.16 on April 15. What amount will Palmer Corporation report as an option expense in net income during the period January 15 to April 15?

$1,728.

$6,912.

$4,320.

$2,160.