Suppose that your firm signs a contract to supply 100 tractors to a firm in Italy with delivery in 1 year. The contract specifies that the price will be 100,000 euros per tractor. You manufacture the tractor in the U.S. and all your costs are in $US. You can borrow or lend euros at 6% per year and you can borrow or lend $US at 4% per year. The spot exchange rate is $1.053 per euro or about .95 euros per dollar and the one-year futures contract for euros is $1.02 per euro or about .98 euros per $. What is the exchange rate risk faced by this firm? How should it hedge this risk with futures (there are no options), explaining your reasoning? Is hedging with futures the best way (the lowest cost) to hedge this risk? Explain your reasoning