Question

Which of the following statements is correct for a U.S. importing firm that owes GBP 1,000,000...

Which of the following statements is correct for a U.S. importing firm that owes GBP 1,000,000 payable in three months? Assume the company's WACC is 12% p.a. and the premium on the 3-month call option with a strike price of USD1.44/GBP is 2%.  The current spot price is USD1.45/GBP.

The U.S. importer's payable cost will be USD 1,469,870 if the call option is exercised

The U.S. importer's payable cost will be USD 1,418,058 if the call option is exercised

The U.S. importer's payable cost will be USD 1,460,600 if the call option is exercised
The U.S. importer's payable cost will be USD 1,410,953 if the call option is exercised

The U.S. importer's payable cost will be USD 1,404,287 if the call option is exercised
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