Suppose that Mullen Co, a .. based MNC, knows that it will need 100,000 pounds in one year in order to purchase supplies. It is considering forward call option to hace these payables. Currency call option on the pound with spation dates in one year cuently have an award $1.21 and a premium of $0.03 Mullen Co. wishes to use its own forecast of what the spot rate might be for the pound one year from now. The company believes there are three possible outcomes for the spot rate for the pound in one year. These three scenarios are shown in the following tables Pound Spot Rate in 1 Year Option Premium Ekerese Options? Scenario Total Price Per Unit with Premium 11.19 1 Probability 20.00% 70.00% $1.16 $0.03 Total Price Paid for 100,000 Pound $110,000 124,000 $124,000 no 2 30.03 01.24 3 10.00% $1.24 30.03 $1.24 ye Mullen would like to analyze the possible dollar cash outflows from not hedging the payables. Using this strategy case, the possible collar cash outflows are shown in the following tables Scenario Probability $1.16 1 Pound Spot Rate in 1 Year 20.0096 70.00% Total Price paid for 100,000 Pounds $116,000 $120,000 $124,000 2 $1.22 3 $1.24 10.0096 Given the information in the table, the expected value of dollar cash outflows when not hedging payables, but simply using dollar to purchave found at the spot rate in one year, is for all 100,000 pounds. TOTAL SCORE: 0/3 Grade It Now Save & Continue