The LBC, imports equipment from HBC in Canada. With the steady decline of the U.S dollar against the Canadian dollar LBC is finding a continued relationship with HBC to be an increasingly difficult proposition. In response to LBC's request, HBC has proposed the following risk-sharing arrangement. First, set the current spot rate as the base rate. As long as spot rates stay within 8% (up or down) LBC will pay at the base rate. Any rate outside of the 8% range, HBC will share equally with LBC the difference between the spot rate and the base rate. If the current spot rate is C$1.03/$

a) What are the upper and lower limits for trading? Please show calculation.

b) If LBC has a payable of C$100,000 due today and the current spot rate is C$1.12/$, how much does LBC owe in U.S. dollars? Please show calculation c) If LBC has a payable of C$100,000 due today and the current spot rate is C$0.93/$, how much does LBC owe in U.S. dollars? Please show calculation