Victoria Ltd is a British importer of Australia Kangaroo meat and owes AWM Sydney Pty Ltd the Australia exporting company a payment of GBP 100,000, due in three months. The following information is available: Spot exchange rate (AUD/GBP) 2.59752.6025 Three-month forward rate 2.61752.6225 Australian three-month interest rate 7.758.25 p.a. British three-month interest rate 9.7510.25 p.a. (i) Calculate AWM Sydney Pty Ltd Australian dollar value of the receivables under a money market hedge.

(ii) Calculate AWM Sydney Pty Ltd Australian dollar value of the receivables under a forward hedge.

(iii) If the spot exchange rate in three months is expected to be 2.6475-2.6525, will the hedge be taken? What if it is 2.54752.5525?