FORWARD CURRENCY CONTRACT. FOR THIS AND THE NEXT 2 QUESTION. Today, a US firm agrees to buy merchandise from Mexico worth 12 million Mexican pesos. The merchandise will be delivered in 60 days with payment to be made in 90 days (that is, 30 days after the goods are received). The current exchange rate is 16.40 pesos per USD. The US firm is afraid the dollar will depreciate against the peso by the payment date, which will make the dollar-cost of the merchandise more expensive than it is today. To hedge this risk, the US firm buys enough Mexican pesos in the 90-day forward market to completely cover the total cost of the merchandise. The 90-day forward exchange rate is 14.45 pesos per USD. Suppose that 90 days from now, when it's time to make payment, USD has lost 20 percent of its value.

Without forward contract, what will be the total dollar cost of the merchandise 90 days from now?

		$731,707.32
		$776,699.03
		$830,449.83
		$914,634.15
		None of the above