RainMap is an Australian firm that sells interactive maps to customers across Europe. Its main competitors are from the U.S. and Europe. The firm expects to receive €10 million in 180 days from its contract with EuroMap, a German firm. RainMap wishes to hedge against the € exposure. Three months ago, the European interest rate was 0.5% p.a. which was lower than the Australian interest rate of 1% p.a. However, after a series of rate hikes, the European prevailing interest rate is 2% p.a., while that of Australia is 1.5% p.a. The current spot rate of the € is $1.5. The 180-day forward price is $1.4/€. The 180-day European call option on $ with an exercise price of €0.66 is selling at a 2% premium. The 180-day European put option on $ with an exercise price of €0.67 is selling at a 3% premium.

A) What is the $ receipt of using a forward hedge at the time the payment is due?

 
B) What is the $ receipt of using money markets to hedge at the time the payment is due?

C) What is the $ receipt of an option hedge at the time the payment is due assuming you exercise the option when the payment is due?

 
D)  Which hedging methods should RainMap choose?