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Kansas Corporation, an American company, has a payment of 5.2 million due to Tuscany Corporation...

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Kansas Corporation, an American company, has a payment of 5.2 million due to Tuscany Corporation one year from today. At the prevailing spot rate of 0.90/$, this would cost Kansas $5,777,778, but Kansas faces the risk that the /$ rate will fall in the coming year, so that it will end up paying a higher amount in dollar terms. To hedge this risk, Kansas has two possible strategies. Strategy 1 is to buy 5.2 million forward today at a one-year forward rate of 0.89/$. Strategy 2 is to pay a premium of $102,000 for a one-year call option on 5.2 million at an exchange rate of 0.88/$. a. Suppose that in one year the spot exchange rate is 0.85/$. What would be Kansas's net dollar cost for the payable under each strategy? Note: Round your answer to the nearest whole dollar amount. b. Suppose that in one year the spot exchange rate is 0.95/$. What would be Kansas's net dollar cost for the payable under each strategy? Note: Round your answer to the nearest whole dollar amount

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