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INTERNATIONAL FINANCE- PLEASE WRITE OUT YOUR CALCULATIONS!!!

3) Assume that Smith Corporation will need to purchase 250,000 British pounds in 90 days. A call option exists on British pounds with an exercise price of S1.70, a 90-day expiration date, and a premium of S.04. A put option exists on British pounds, with an exercise price of S1.69, a 90-day expiration date, and a premium of $.03. Smith Corporation plans to purchase options to cover its future payables. It will exercise the option in 90 days (if at all). It expects the spot rate of the pound to be S1.76 in 90 days. Determine the amount of dollars it will pay for the payables, including the amount paid for the option premium.

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