You plan to sell a device one year from today at a production cost of 800 at that time. The price of the device one year from now is 750, 850 or 950 with corresponding probabilities 20%, 50% and 30%. The continuously compounded risk-free interest rate is 6% per year. [a] Calculate the expected profit per device.

[b] Suppose you can hedge your sale today by buying a one-year European put struck at 900. Calculate the break-even put price, at which you achieve the same expected profit per device with or without the hedge.