A U.S.firm has sold an Italian firm €1,000,000 worth of product.In one year the U.S.firm gets paid.To hedge,the U.S.firm bought put options on the euro with a strike price of $1.65.They paid an option premium $0.01 per euro.If at maturity,the exchange rate is $1.60,

Question

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If the exchange rate at maturity is $1.60, then the put option will be exercised since it has a strike price of $1.65. This means the U.S. firm can sell euros at $1.65, even though the exchange rate is lower at $1.60. Therefore, the U.S. firm will receive €1,000,000 x $1.65 = $1,650,000. 
However, the U.S. firm paid an option premium of $0.01 per euro, which comes out to a total cost of €1,000,000 x $0.01 = $10,000. Therefore, the net amount the firm will receive is $1,650,000 - $10,000 = $1,640,000.
This is the amount the U.S. firm will realize on the sale net of the cost of hedging, so the correct choice is C.

A USFirm Has Sold an Italian Firm €1,000,000 Worth of Product