a$1.$ How much ir$-$U$.$S$.$ dollars wil Krystal receive in $3$ months without a hedge if the expected spot rate $3$ months is assumed to be $118\mathrm{.}130/$$$?($Round to the nearest oent.$)$

A$2.$How much in U$.$S$.$ dollars wil Krystal receive in $3$ months with a forward market hedge? $($Round to the nearest cent.$)$

A$3.$How much in U$.$S$.$ dollars will Krystal reoeive in $3$ months with a money market hedge?

A$4.$ How much in U$.$S dollars will krystal receive in: $3$ months with an option, hedge if the expected spot rate in $3$ months IS assumed be greater than $118\mathrm{.}000$$$?$

b$.$ What is the break$-$even reinvestrment rate when comparing forward and money market alternatives?

Krystal. Krystal is a U$.$S$.-$based company that manufactures, sells, and installs water purification equipment. On April $11,$ the company sold a systemito he Eity of Nagasaki, Japan, for installation in Nagasaki's famous Glover Gardens $($where Puccini's Madame Butterfly waited for the return of Lit. Pinkerton$).$ The sale was priced in$,$ yen at $720,000,000,$ with payment due in three months. The exchange rate and interest rate data are shown in the popup window:

Note that the interest rate differentials vary slightly from the forward discounts on the yen because of time differences for the quotes. The spot $\frac{118\mathrm{.}130}{\text{\$}},$ for example, is a mid$-$pointrange. On April $11,$ the spot yen traded in London from $\frac{118\mathrm{.}987}{\text{\$}}$ to $\frac{117\mathrm{.}272}{\text{\$}}.$ Krystal's Japanese competitors are currently borrowing yen from Japanese banks at a spread of wo percentage points above the Japanese money rate. Krystal's weighted average cost of capital is $16\%,$ and the company wishes to protect the dollar value of this receivable.

$3-$month options are available from Kyushu Bank: call option on $20,000,000$ at exercise price of $\frac{118\mathrm{.}000}{\text{\$}}$ : a $1\mathrm{.}4\%$ premium; or a put option on $20,000,000,$ at exercise price of $\frac{3118\mathrm{.}000}{\text{\$}}$ : a $3\mathrm{.}9\%$ premium.

Click on the following icon in order to copy its contents into a spreadsheet.$)$

Spot exchange rate:

$1-$month forward rate:

$3-$month forward:

$1-$year forward:

$\frac{118\mathrm{.}130}{\text{\$}}($closing mid$-$rates$)$

$\frac{117\mathrm{.}674}{\text{\$}},$ a $4\mathrm{.}65\%$ per annum pren$]$um

$\frac{116\mathrm{.}749}{\text{\$}},$ a $4\mathrm{.}73\%$ per annum premium

$\frac{112\mathrm{.}580}{\text{\$}},$ a $4\mathrm{.}93\%$ per annum premium

$($Click on the following icon in order to copy its contents into a spreadsheet.$)$

$\backslash$table$[[$Money Rates,United States,Japan,Differential$],[$One month,$4\mathrm{.}9250\%,0\mathrm{.}09250\%,4\mathrm{.}83250\%$