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Kogan, an Australian online retailer, has an liability of 1,500,000 EUR payable in one year to...

Kogan, an Australian online retailer, has an liability of 1,500,000 EUR payable in one year to a bank in Germany. The current spot rate is 2.1205 AUD/EUR and the one year forward rate is 2.1185 AUD/EUR. The annual interest rate is 4% in Germany and 3.5% in Australia. The company can also use options on EUR at the strike price of 2.1200 AUD/EUR for a premium of 0.05 AUD/EUR. Suppose the future exchange rate is 2.1225 AUD/EUR. The AUD outcome of using the option hedge for this transaction is

Select one:

a. none of the options

b.  $3,106,125.00

c.  $3,257,625.00

d.  $3,261,375.00

e.  $3,102,375.00  

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