Rexburg Industries exported bulldozers to a German construction company. Rexburg received payment of 5,000,000 in one year. Rexburg hedged this transaction by purchasing a put option to sell EUR for USD at a strike price of $1.25/1. The cost of this put option was $0.02 per euro. The spot rate at maturity was $1.20/1. How much did Rexburg profit by hedging this transaction? Assume an annual risk-free interest rate of 5.0 percent.

Multiple Choice

• None of the options.

• $262,500

• $250,250

• $125,000

• $145,000