Question $4(25$ points$)$:

The company you are working company got a contract to supply a total of $150,000$ units to a major project. The unit sales price is $1\mathrm{.}000TL.$ You will be supplying $50,000$ units$/$month starting from the end of month $1$ until the end of month $3.$ The payment terms will be $2$ months: i$.$e$.$ your company will be paid $2$ months after delivery of goods. So$,$ the first shipment will be done at the end of month $1$ and its payment will be received at the end of $3$rd month, so on etc.

Your company has purchased the same goods from China at a price of $25\mathrm{.}0$ $$/$unit$.$ The payment term is again delivery $+2$ months.

The current exchange rate is US$$/$TRY: $33\mathrm{.}00$

Your boss has calculated a profit of $175T\frac{L}{u}$nit or a total of $26,250,000TL$ from this contract. He then says that the profit of this contract is $$795,455.$

a$)$ Is your boss right? What type of risk is this contract exposed to$?$ What can you do to hedge this risk?

b$)$ If you completely hedge this risk what will be the profitability of this transaction? What will be the Present value of the profits $($you can state your profits either in TL or US$$)$

The current interest rates are given in the following table:

Spot $($US$$/$TRY$),33,0000$

$\backslash$table$[[,\backslash$table$[[$Spot interest$],[$rates$]],$US$$,$TRY$],[\backslash$table$[[1],[2],[3],[4],[5],[6],[6],[7],[8r$