Q.1: A bank in Australia quotes the following exchange rates.

AUD/USD spot rate (S0U$/A$): 0.7455 / 0.7485 USD per AUD

9-month swap points: +0.0075 / +0.0080 USD per AUD

AUD-Call, T = 9 months, X = 0.7548 USD per AUD and C = 0.0400 USD per AUD

AUD-Put, T = 9 months, X = 0.7548 USD per AUD and C = 0.0330 USD per AUD

An Australian firm has U$1,000,000 in account payables due in 9 months. The firm wants to hedge the exchange rate exposure from this U$-AP.

1.1. What is the A$-cost of this U$-AP after using the FX forward to hedge?

1.2. What is the A$-cost of this U$-AP after using the FX options to hedge? (including the cost of option premium)

1.3. Give suggestions to the firm on how it could choose between these 2 hedging alternatives.

Ps. Could you please explain each sub-question in detail? Thank you so much in advance :)