Foreign currency forward pricing problem?

I have been trying to solve this problem and I don't know where to go. A company enters into a forward contract with a bank to sell a foreign currency for K1 at time T1 . The exchange rate at time T1 proves to be S1 > K1 (NOTE, S1 is the spot price at T1). The company asks the bank if it can roll the contract forward until time T2 > T1 rather than settle at time T1 . The bank agrees to a new delivery price, K2 . Explain how K2 should be calculated. I'm thinking there should be a time adjusted difference between K1 and S1 factored into the new price along with the spot price at T1 (S1). K2=(2*S1-K1)*exp^((r-rf)(T2)) I'm not sure what direction to go in after that. Maybe I'm thinking about this too hard, but I feel like I'm missing something.

Public Comments

1. I think you are right, it's just the time value. You would sell spot and buy forward again. The rate would obviously be different to the last trade. If it were indeces you would have to take account of any dividends from the underlying securities.