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Ganado has concluded another large sale of telecommunications equipment to Regency (U.K.). Total payment of 3,100,000 is due in 90 days. Maria Gonzalez has also learned that Ganado will only be able to borrow in the United Kingdom at 14.001% per annum (due to credit concerns of the British banks). Given the exchange rates and interest rates below, compare alternate ways that Ganado might hedge its foreign exchange transaction exposure. Assume a 360-day financial year.

90-day A/R in pounds	3,100,000
Spot rate ($/)	$1.7526
90-day forward rate ($/)	$1.7425
3-month U.S. dollar investment rate	5.959%
3-month U.S. dollar borrowing rate	8.255%
3-month U.K investment interest rate	9.761%
3-month U.K. borrowing interest rate	14.001%
Ganados WACC	11.145%
Expected spot rate in 90 days ($/)	$1.7934
Put options on the British pound:
Strike rate ($/)	$1.7400
Put option premium	1.5%
Strike rate ($/)	$1.7100
Put option premium	1.0%

a. How much in U.S. dollars will Ganado receive in 90 days without a hedge if the expected spot rate in 90 days is the same as the current spot rate of $1.7526/ ?

b. How much in U.S. dollars will Ganado receive in 90 days without a hedge if the expected spot rate in 90 days is the same as the 90-day forward rate of $1.7425/?

c. How much in U.S. dollars will Ganado receive in 90 days without a hedge if the expected spot rate in 90 days is the same as the expected spot rate of $1.7934/?

d. How much in U.S. dollars will Ganado receive in 90 days with a forward market hedge?

e. How much in U.S. dollars will Ganado receive in 90 days with a money market hedge?

f. How much in U.S. dollars will Ganado receive in 90 days if Ganado covers the transaction exposure with the $1.7400/ put option and the pound depreciates below $1.7400/ in 90 days?

g. How much in U.S. dollars will Ganado receive in 90 days if Ganado covers the transaction exposure with the $1.7100/ put option and the pound depreciates below $1.7100/ in 90 days?

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