PepsiCo would like to hedge its C$40 million payable to Alcan, a Canadian aluminum producer, which is due in 90 days. Suppose it faces the following exchange and interest rates:

Spot rate: $0.9422-31/C$;

Forward rate (90 days): $0.9440-61/C$;

Annualized 90-day interest rates are 4.71%4.64% for Canadian dollar and 5.50%5.35% for the U.S. dollar (the first interest rate is the borrowing rate and the second one is the lending rate).

a Calculate the total cost of a forward hedge for this payable.

b Calculate the total costs of a money market hedge for this payable.