Required:

a$.$ Compute the future dollar costs of meeting this obligation using the money market and forward hedges.

b$.$ Assuming that the forward exchange rate is the best predictor of the future spot rate, compute the expected future dollar cost of

meeting this obligation when the option hedge is used.

c$.$ At what future spot rate do you think PCC may be indifferent between the option and forward hedge?

Answer is not complete.

Complete this question by entering your answers in the tabs below.

Compute the future dollar costs of meeting this obligation using the money market and forward hedges.

$$ Answer is not complete.

Need answer for A$1.$ provided answer for A$2,$ need answer for B & C$.$ Complete this question by entering your answers in the tabs below.

Assuming that the forward exchange rate is the best predictor of the future spot rate, compute the expected future dollar cost

of meeting this obligation when the option hedge is used.

At what future spot rate do you think PCC may be indifferent between the option and forward hedge?

Indifferent between the option and forward hedge