Assume that you are the manager of the foreign exchange trading desk of a US exchange dealer.

The current spot exchange rate is $$1\mathrm{.}40/.$

The one$-$year interest rate in the US is $8\%,$ and the rate in Europe is $10\%.$

Assume that a US customer wants to buy $25$ million forward in one year.

$$ What forward rate would you offer the customer so that your firm nets a return of $2\%$ over the forward rate on the transaction?

Assume that you will hedge your exposure to exchange rate risk in the spot market.