UA purchased an aircraft from Airbus and was billed 30 million Euros payable in 1 year.

UA is concerned with the United States Dollar costs from international sales. and would like to control exchange risk. The current spot exchange rate is $1.05/Euro and one-year forward exchange rate is $1.10/Euro at the moment. UA can buy a one-year option on euro with a strike price of $1.12/Euro for a premium of $.02/Euro. Currently, the annual interest rate is 5% in the euro zone and 6% in the U.S.

1) if UA wants to hedge the transaction exposure using forward, UA should enter a ______ position in a forward contract of 30 Million Euros? (long/short)

2) if UA enters a forward euro contract today, the guaranteed dollar cost for this euro obligation in one year should be $______ million?