Forward Pricing and Valuation: Currency Forward Example

Jessica is a financial analyst at a multinational corporation that engages in international trade. The company has a contract to sell goods to a firm in Europe, and the payment of €1 million is due in six months. To hedge against the risk of unfavorable exchange rate movements between the Euro and the US Dollar, Jessica is considering entering into a currency forward contract.

The current spot exchange rate is €1 = $1.20, and the six-month forward exchange rate is quoted at €1 = $1.25. Assuming an interest rate of 3% annualized for the Euro and 1.5% for the US Dollar, what will be the effective USD amount that Jessica will receive from this forward contract when the payment is received in Euros?