Suppose X Industrials, a U.S. company, exported wind turbines to GB Power and Light for 100 million. The spot exchange rate is $1.40/ and the forward exchange rate is $1.35/ (1-year maturity). The interest rate in the U.S. is 4.5%. Assume that the premium for a put option with an exercise price of $1.35 is $0.03 per pound. Use a table to show the gross and net proceeds for X Industrials for the following future spot rates.

$1.20, $1.30, $1.35, $1.40 and $1. Construct the payoff picture of the option hedge vs. the forward hedge.