RR has agreed to sell goods to XX for S20.

Current rate: 4.3 £/S

Inflation (annual): S = 2.8%, £ = 4.6%.

Approximate 6-month inflation:

S: 1.4%

£: 2.3%

Forward rate (6 months):

F≈4.3×1.0231.014≈4.3387 £/SF \approx 4.3 \times \frac{1.023}{1.014} \approx 4.3387\ \text{£/S}F≈4.3×1.0141.023​≈4.3387 £/S

Payment: 20,000 S

£ value≈20,000×4.3387≈86,774\text{£ value} \approx 20{,}000 \times 4.3387 \approx 86{,}774£ value≈20,000×4.3387≈86,774

Nearest option: £86,760

Correct answer: C. £86,760