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shown in the following table: Scenario Probability Pound Spot Rate in 1 Year Option Premium Total Price Per Unit, with Premium 1 25.00% $1.16 Total
shown in the following table: Scenario Probability Pound Spot Rate in 1 Year Option Premium Total Price Per Unit, with Premium 1 25.00% $1.16 Total Price Paid for 300,000 Pounds $357,000 Exercise Options? $0.03 2 50.00% $1.19 $1.21 $0.03 no 3 25.00% $1.23 $1.24 $369,000 $0.03 yes $1.23 $369,000 yes Mullen would like to analyze the possible dollar cash outflows from not hedging the payables. outflows are shown in the following table: sing this strategy case, the possible dollar cash Scenario Probability Pound Spot Rate in 1 Year 1 Total Price Paid for 300,000 Pounds $348,000 $1.16 25.00% 2 $1.21 50.00% $363,000 3 $1.24 25.00% $372,000 Given the information in the table, the expected value of dollar cash outflows when not hedging payables, but simply using dollars to purchase at the spot rate in one year, is $ for all 300,000 pounds
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