Princess Cruise Company (PCC) purchased a ship from MitsubishiHeavy Industry for 760 million yen payable in one year. The currentspot rate is JPY 137 = USD 1. The annual interest rate is 6% inJapan and 9% in the United States. a. Compute the future US$ costof meeting this obligation using the money market hedges. b. Whatwould you expect the forward rate to be? Explain. c. PCC can alsobuy a one-year call option on yen at the strike price of $.0068 peryen for a premium of .014 cents per yen. What would be premium beif you fully hedge with options? D