On January 1,2015, Nathan Co paid 6,000 cash to acquire a put foreign exchange option FC37,500 which expires at the end of the year. The option hedges 2015's forecasted sales of FC37,500.Nathan's...

On January 1,2015, Nathan Co paid 6,000 cash to acquire a put foreign exchange option FC37,500 which expires at the end of the year. The option hedges 2015's forecasted sales of FC37,500.Nathan's fiscal year ends every October 31.
                                                 1/1/15    10/31/15   12/31/15
Spot rate ( market price)        1.45.        1.20              1.30
Strike price (exercise price)     1.40        1.40              1.40
Fair value of put action              6,000      25,250
Determine the intrinsic value at inception of the option contract.
12,750
4,125
6,000
0