Pupule Travel, a Honoloulu, Hawaii based 100% privately owned travel company, has signed an agreement to acquiere a 50% ownership shae of Taichung Travel, a Taiwan -based privately owned travel agency specializing in servicing inbound customers from the United States and Canada. The acquisition price is 7 milliion Taiwan dollars (T$7,000,000) payable in cash in three months.

Thomas Carson, Puple Travel's owner believes the Taiwan dollar will either remian stable or decline slightly over the next three months. at the present spot rate of T$35/$, the amount of cash required is only $200,000 bu enve this relatively modest amount will need to be borrowed personally by Thomas Carson Taiwanese interest bearing depositis by nonresidents are regulated by the government, and are currently set at 1.5% per year. He has a credit line with Bank of Hawaii for $200,00 with a current borrowing interest rate of 8% per year. He does not believe that he can calculate a credibel weigheted average cotst of capital since he has no stock outstanding and his competitiors are all also privatley held. Since the acquisition would use up all his available credit, he wonders if he should hedge this transaction exposure. He has the following quotes from the Bank of Hawaii:

Spot rate (T$/$)	33.40
3 month forward rate (T$/$)	32.40
3 month Taiwan dollar deposit rate	1.5%
3 month dollar borrowing rate	6.5%
3 month call option on T$	Not available