Problem 4: Micca Metals, Inc. is a specialty materials and metals company located in Detroit, Michigan. The company specializes in specific precious metals and materials which are used in a variety of pigment applications in many other industries including cosmetics, appliances, and a variety of high tinsel metal fabricating equipment. Micca just purchased a shipment of phosphates from Morocco for 6,000,000, dirhams, payable in six months. Given the information below, calculate and compare the cost of forward, money market and option hedges. Assumptions Shipment of phosphates from Morocco, Moroccan dirhams Micca's cost of capital (WACC) Spot exchange rate, dirhams/$ Six-month forward rate, dirhams/$ Values 6,000,000 16.000% 10.00 10.20 Six-month interest rate for borrowing (per annum) Six-month interest rate for investing (per annum) United States 6.000% 5.000% Morocco 8.000% 6.000% Options on Moroccan dirhams: Strike price, dirhams/S Option premium (percent) Call Option 10.00 2.000% Put Option 10.00 3.000% Problem 4: Micca Metals, Inc. is a specialty materials and metals company located in Detroit, Michigan. The company specializes in specific precious metals and materials which are used in a variety of pigment applications in many other industries including cosmetics, appliances, and a variety of high tinsel metal fabricating equipment. Micca just purchased a shipment of phosphates from Morocco for 6,000,000, dirhams, payable in six months. Given the information below, calculate and compare the cost of forward, money market and option hedges. Assumptions Shipment of phosphates from Morocco, Moroccan dirhams Micca's cost of capital (WACC) Spot exchange rate, dirhams/$ Six-month forward rate, dirhams/$ Values 6,000,000 16.000% 10.00 10.20 Six-month interest rate for borrowing (per annum) Six-month interest rate for investing (per annum) United States 6.000% 5.000% Morocco 8.000% 6.000% Options on Moroccan dirhams: Strike price, dirhams/S Option premium (percent) Call Option 10.00 2.000% Put Option 10.00 3.000%