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(Transaction Exposure)Trident A U.S.-based company, has concluded a sale of telecommunications equipment to Regency (U.K.). A total payment of 2,000,000 is due in 90 days.

(Transaction Exposure)Trident A U.S.-based company, has concluded a sale of telecommunications equipment to Regency (U.K.). A total payment of 2,000,000 is due in 90 days. The following table shows relevant exchange rates and interest rates. To hedge, the company is considering using 2,000,000 put options with the strike of $1.55/. The minimum net receipt (accounting for the cost) from such options hedge is $______ in 90 days. (Keep two decimal numbers/)

Assumptions Value
90-day A/R in pounds 2,000,000.00
Spot rate, US$ per pound ($/) $1.5610
90-day forward rate, US$ per pound ($/) $1.5614
3-month U.S. dollar investment rate 3%
3-month U.S. dollar borrowing rate 8%
3-month UK investment interest rate 7%
3-month UK borrowing interest rate 12%
Put options on the British pound: Strike rates, US$/pound ($/)
Strike rate ($/) $1.55
Put option premium 7.3%
Strike rate ($/) $1.54
Put option premium 4.1%
Strike rate ($/) $1.55
Call option premium 5.3%
Trident's WACC 13.000%
Expected spot rate in 90 days, US$ per pound ($/) $1.5431

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