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XYZ Corporation, located in the United States, has an accounts payable obligation of 750 million payable in one year to a bank in Tokyo. The
XYZ Corporation, located in the United States, has an accounts payable obligation of 750 million payable in one year to a bank in Tokyo. The current spot rate is 116/$1.00 and the one year forward rate is 109/$1.00. The annual interest rate is 3 percent in Japan and 6 percent in the United States. The future dollar cost of meeting this obligation using the forward hedge is
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a)$6,450,000
b)$6,545,400
c)$6,653,833
d)$6,880,734
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