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What is the fabs dollar cash outflows

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FAB Corp. will need 280,877 Canadian dollars (C$) in 90 days to cover a payables position. Currently, a 90-day call option with an exercise price of $0.77 and a premium of $0.04 is available. Also, a 90-day put option with an exercise price of $0.72 and a premium of $0.04 is available. FAB plans to purchase options to hedge its payables position.

Question 1: If the spot rate in 90 days is $0.84, what is the FAB's dollar cash outflows, assuming FAB wishes to minimize its cost (please round to a dollar)? ?

Reference no: EM132495615

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