ABC Com.pany Inc, impor.ts equipment from BPD Company located in Germany. With the steady de.cline of the Can.adian dollar against the Euro ABC is finding a continued relation.ship with BPD to be incr.easingly difficult. In response to ABC's request, BPD has pro.posed the following risk-sharing arrangement. First, set the cu.rrent spot rate of C$1.30/ as the base rate. As long as spot rates stay with.in 2.5% (up or down) ABC will p.ay at the base rate. Any rate out.side of the 2.5% range, BPD will share equally with ABC the diff.erence between the spot rate and the base r.ate. The agree.ment is for the next year .

At the next pay.ment in 2 months, what effective ex.change rate is paid in C dollars if the spot rate is C$1.32/ and the s.ale is for 199,999 ?

At the next pay.ment in 4 months, what effective ex.change rate is paid if the spot r.ate is C$1.38/ and the s.ale is for 199,999?