Boeing just signed a contract to sell a Boeing $737$ aircraft to Air France. Air France will be billed $10\mathrm{.}08$ million payable in one year. The

current spot exchange rate is $$\frac{1\mathrm{.}05}{}$ and the one$-$year forward rate is $$\frac{1\mathrm{.}10}{}.$ The annual interest rate is $6$ percent in the United

States and $5$ percent in France. Boeing is concerned with the volatile exchange rate between the dollar and the euro and would like to

hedge exchange exposure.

a$.$ It is considering two hedging alternatives: sell the euro proceeds from the sale forward or borrow euros from Cr$$dit Lyonnaise

against the euro receivable. Which alternative would you recommend?

b$.$ Other things being equal, at what forward exchange rate would Boeing be indifferent between the two hedging methods? $($Do not

round intermediate calculations. Round your answer to $2$ decimal places.$)$

Forward exchange rate