Edneg Co, whose home currency is the dollar ($), has purchased non-current assets from Hradip Co for 1,800m pesos. Edneg Co has been granted six months' credit by Hradip Co and must make payment in full by the end of this period.

Edneg Co is concerned that the dollar-peso exchange rate has been volatile recently and is considering three methods of hedging the exchange rate risk associated with its future peso payment: a forward exchange contract; a lead payment on the current date; and a money market hedge. It wishes to compare the dollar costs of these hedging methods in future value terms at the end of six months.

Exchange rate information is as follows:

Current spot exchange rate

Six-month forward exchange rate

50.0 - 50.5 pesos per $1

53.4 - 54.2 pesos per $1

Us mi

The following non-annualised interest rates are available to Edneg Co:

Dollar six-month interest rates

Peso six-month interest rates

Deposit

%

2

8

Borrow

%

5

12

Edneg Co has no cash available for hedging exchange rate risk and must borrow any cash required by each hedging method.

using forward exchange contract, what is the dollar cost of the peso paymebt at the end of six months?