Hanson Corp

Multiple Choice

Hanson Corp. frequently uses a forward hedge to hedge its British pound (£) payables. For the next quarter, Hanson has identified its net exposure to the pound as being £1,000,000. The 90-day forward rate is $1.50. Furthermore, Hanson's financial center has indicated that the predicted value of the British pound at the end of the next quarter is $1.57. Based on this information, what is the expected real cost of hedging payables?

A) $70,000
B) -$70,000
C) $0
D) $1,570,000