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What is the total cost of the account payable

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Reference no: EM132841186

Question - Carson Printing is a U.S. multinational that just purchased £800,000 of goods on account, due in 30 days from a British supplier. The spot exchange rate is $1.775/£. Carson wants to hedge the account payable with an OTC call option with a strike price of $1.800/£. The option premium is 0.50 percent, and the 30-day periodic rate in the U.S. is 0.40 percent. If the spot exchange rate in 30 days is $1.825/£, what is the total cost of the account payable (including the cost of the option)?

a.1083456

b.1085346

c. $1452871.6

d. $1447128.4

Reference no: EM132841186

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