Suppose the spot exchange rate is 1 =$1.10, the expected exchange rate one year in the future is 1 =$1.122, the dollar interest rate is 4%, and the euro interest rate is 2%.

1. US exporter sells 150,000 worth of goods to a European buyer.

i)If the payment in euros is received today, what is its value in US$?

ii)If the payment in euros is received one year from now, what will be its value in US$?

iii)How can the seller hedge against the exchange rate risk using futures contracts