You are the purchasing manager of a major health-care provider. A certain generic drug is selling at a price of $10 per unit. To ensure that costs for this drug do not exceed $12 per unit the following year, you arrange a guaranteed maximum price with the supplier for a commitment fee of $0.15 per unit. The growth rate of the drug price is normally distributed at 30% with a standard deviation of 10%. The risk-free rate of interest is 1%. Is the commitment fee priced appropriately to offer your firm a reasonably priced hedge against escalating health care costs?