AMan entersd into a contract with UK manufacturing company to deliver 25 trucks on 1st January 2019 payment to be made within two months from the date of delivery. The exchange rate in spot market on the date of transaction is OMR 0.47456 = 1 GBP. The total cost of 25 trucks amounts to GBP1, 250,000. The truck was delivered on 1st May 2019. Assuming that the forward contract price of OMR is at a forward premium of 7% for 1st July and the spot rate of OMR is expected to appreciate by 5% against GBP by July 2019.

a. Find out the amount of OMR to be paid by the dealer if he goes for forward contract.

b. Find out the amount of OMR to be paid by the dealer if he goes for actual price in July

c. If the dealer has an option to buy the GBP in July at 3 % depreciated value of OMR from
January spot rate with 5 % premium, should he accept the option. If he accepts the options find out the amount of OMR paid by him and the difference between option price and actual price.