Ouestion 4 Unilever is a British-Dutch transnational consumer goods company, and it has a subsidiary in Indonesia. Unilever Indonesia (LEI). UI procures much of its product line from a Japanese company. Because of the shortage of working capital in Indonesia, payment by Indonesian importers are typically days or longer, IJI Wishes to hedge a I O million Japanese yen (JPY) payable, Although options arc not on the Indonesian rupiah (IDR), forward rates are available against the yen. Additionally, a cxvmmon practice in Indonesia is for companies like UI to work with local currency agents who will lock in the current spot exchange rate in exchange for a 2.5% upfront fee. Assume the following exchange ratcs and interest rates are available for U]; Exchange Rate Spot rate for JPY 180day forward rate for JPY Interest Rate 180-day interest rate for IDR 180-day interest rate for JPY 131.30 IDR 132.80 IDR 3.50% 1.70% 131.80 IDR 133.20 IDR 3.80% (a) (c) Suppose UI uses a forward market hedge How much does it cost UI (correct to thc nearest rupiah) to settle the JPY payable? (5 marks) Suppose IJI uses a money market hedge and borrows any required funds HOW much does it cost UI (correct to the nearest rupiah) to settle JPY payable? (I O marks) Suppose UI uses a currency agent hedge and pays the agent' s fce using cash. Note that thc agent's upfront fee is based on the current spot exchange rate and is an opportunity COSI associated With the fee paid, HOW much does it COSt Ul (correct to the nearest rupiah) to settle the JPY payable, (5 marks) Given that UI makes a decision (i.e., forward market hedge, money market hedge, currency agent hedge) purely on a cost basis, what would its optimal choice? (5 marks) (TOTAL: 25 marks)