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# Use the following information to calculate the dollar cost of using a money market hedge to hedge 200,000 pounds of payables due in 180 days. Assume...

5. Use the following information to calculate the dollar cost of using a money market hedge to
hedge 200,000 pounds of payables due in 180 days. Assume the firm has no excess cash.
Assume the spot rate of the pound is \$2.02, the 180-day forward rate is \$2.00. The British
interest rate is 5%, and the U.S. interest rate is 4% over the 180-day period.
a. \$391,210.
b. \$396,190.
c. \$388,210.
d. \$384,761.
e. none of the above.

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