Princess Cruise Company(PCC) purchased from Mit Heavy Industry for 520 million yen payable in one year. The current spot exchange rate is 125 yen per dollar and the one year forward rate is 111 yen per dollar. The annual interest rate is 6 percent in Japan and 9 percent in the United States. PCC can also buy a one year call option on yen at the strike price of $0.0080 per yen for a premium of $0.0140 cents per yen. a) Compute the dollar costs of meeting this obligation using the money market and forward hedges b) Assuming that the forward exchange rate is the best predictor of the future spot rate, compute the expected future dollar cost of meeting this obligation when the forward hedge is used. c) At what future forward exchange rate do you think PCC may be indifferent between the option and forward hedge?