Question: A U . S . firm has a debt obligation of 2 0 1 million payable in one year. The current spot rate is 1

A U.S. firm has a debt obligation of 201 million payable in one year. The current spot rate is 115 per U.S. dollar and the one-year forward rate is 109 per U.S. dollar. Additionally, a one-year Call option on the Yen with a strike price of $0.0085 per yen can be purchased for a premium of 0.01 cent per yen. The risk-free money-market rate in Japan is 1.9% and the risk-free money-market rate in the U.S. is 3.5%. Calculate the future U.S. dollar cost of meeting this obligation using a money market hedge.

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