On January 10, VW agrees to import auto parts worth $7 million from the US. The parts

Question:

On January 10, VW agrees to import auto parts worth $7 million from the US. The parts will be delivered on March 4 and are payable immediately in dollars. VW decides to hedge its dollar exposure by entering into CME futures contracts. On Chicago Board each euro futures comes with a notional of €125,000 per contract. Only integral number of contracts can be bought or sold. The spot on January 10 is €1.1177/$, and the March futures price is €1.1109/$. On March 4, futures close at €1.1151/$, while the realized spot rate is €1.1171/$.
What will be VW's total cost of payables in Euros under the following three scenarios?
1. Remain un-hedged. (2 Points)
2. Hedging through CME Euro- futures. Specify number of euro futures contracts. Also specify whether long or short? (4 Points)
3. If the hedged position is closed on March 4 and dollars are bought in spot market
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...