Tektronix, Inc. imports some components from a Japanese supplier. Tektronix' CFO now needs to hedge a purchase of components for 80,000,000 from Tektronix' Japanese supplier. Payment is due in six months. He has obtained the following quotes from Citibank. Spot rate Six-month forward rate Six-month yen interest rate Six-month U.S. interest rate WACC Type of Option Six month call option Six month put option a. $1,080,000 b. $950,000 c. $978,000 20. 18. If Tektronix hedges in the forward market, what will be its dollar cost for the components six months from now? a. $0.0135/ $0.0132/A $1,056,000 C. 1.00% p.a. 3.00% p.a. 4.00% p.a. Strike Price $0.0145/ $0.0125/ 19. If Tektronix uses a money market hedge, what will be its dollar cost for the components six months from now? $1,096,119 b. $1,112,079 $1,090,746 d. $1,101,386 Premium Cost 1.50% 1.75% Suppose Tektronix chooses to hedge with the option. Six months have passed, and the spot exchange rate is now $0.0148/. In this case, what is the total cost to Tektronix? a. $1,143,476 b. $1,176,524 C. $1,177,748 d. $1,176,848

Tektronix, Inc. imports some components from a Japanese supplier. Tektronix' CFO now needs to bedge a purchase of components for $80,000,000 from Tektronix Japanese supplier. Payment is due in six months. He has obtained the following quotes from Citibank 18. If Tektronix hedges in the forward market, what will be its dollar cost for the components six months from now? a. $1,080,000 b. $950,000 c. $978,000 (d) $1,056,000 19. If Tektronix uses a money market hedge, what will be its dollar cost for the components six months from now? a. $1,096,119 b. $1,112,079 (c) $1,090,746 d. $1,101,386 20. Suppose Tektronix chooses to hedge with the option. Six months have passed, and the spot exchange rate is now $0.0148%. In this case, what is the total cost to Tektronix? a. $1,143,476 b. $1,176,524 c. $1,177,748 d. $1,176,848