Use the information for the following problem(s).

Plains States Manufacturing has just signed a contract to sell agricultural equipment to Boschin, a German firm, for euro 1,250,000. The sale was made in June with payment due six months later in December. Because this is a sizable

contract for the firm and because the contract is in euros rather than dollars, Plains States is considering several hedging alternatives to reduce the exchange rate risk arising from the sale. To help the firm make a hedging decision

you have gathered the following information.

The spot exchange rate is $1.40/euro

The six month for ward rate is $1.38/euro

Plains States' cost of capital is 11%

The Euro zone 6-month borrowing rate is 9% (or 4.5% for 6 months)

The Euro zone 6-month lending rate is 7% (or 3.5% for 6 months)

The US. 6-month borrowing rate is 8% (or 4% for 6 months)

The US. 6-month lending rate is 6% (or 3% for 6 months)

December put options for euro 625,000, strike price $1.42, premium price is 1.5%

Plains States' forecast for 6-month spot rates is $1.43/euro

The budget rate, or the lowest acoptable sales price for this project, is $1,075, 000 or $1.35/euro

Refer to Instruction 10.1. Plains States could hedge the Euro receivables in the money market. Using the information provided, how much would the money market hedge return in six months assuming Plains States reinvests the

proceeds at the U.S. investment rate?

answer is $1,724,880 but can't figure out how to get there?