8. DuPont has entered into a currency risk sharing arrangement with British Gas(BG). Under the contract, DuPont agrees to pay British Gas a base price of $10 million for gas purchases, but the parties would share the currency risk equally beyond a neutral zone, specified as a band of exchange rates: $1.67-1.73:£1. Within the neutral zone, DuPont must pay BG the pound equivalent of $10 million at the base rate of $1.70. Suppose the spot rate at the time of payment is £1 = $1.63.
a. How much will DuPont owe British Gas?
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