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Princess Cruise Company ( PCC ) purchased a ship from Mitsubishi Heavy Industry for 8 0 0 million yen payable in one year. The current

Princess Cruise Company (PCC) purchased a ship from Mitsubishi Heavy Industry for 800 million yen payable in one year. The current spot rate is 139/$ and the one-year forward rate is 125/$. The annual interest rate is 5 percent in Japan and 8 percent in the United States. PCC can also buy a one-year call option on yen at the strike price of $.0066 per yen for a premium of .014 cents per yen.

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