Tony Chan is an importer of machine tools in Singapore. He has recently entered a contract with a German exporter to import Euro 10 million worth of machine tools for a client based in Singapore. Tony has to make the payment in 90 days when the machinery will be supplied. There is speculation that the Euro will appreciate in 90 days by 1.5% The exchange rate today is Spoto EUR/SGD = 1.38 a) To hedge himself, Tony enters into a Forward Contract. Work out how much Tony saves, assuming that the spot rate at 90 days is 1.5% higher? b) What if the Euro actually depreciates by 2% at Day 90? What would Tony's expense situation be, assuming he went ahead and hedged with F90 EUR/SGD = 1.38