A French firm is considering a one$-$year investment in the United Kingdom with a pound$-$denominated rate of return of i$=15\%.$ The firm's local cost of capital is i$=10\%.$ The project costs $1,000$ and will return $1,150$ at the end of one year. The current exchange rate is $2\mathrm{.}00=1\mathrm{.}00.$

Suppose that the bank of England is considering either tightening or loosening its monetary policy. It is widely believed that in one year there are only two possibilities:

S$1(|)=2\mathrm{.}20$ per $$

S$1(|)=1\mathrm{.}80$ per $$

Following revaluation, the exchange rate is expected to remain steady for at least another year.

Using the notion of a hedge ratio, make a recommendation vis$--$vis how to undertake the project today without "buying" the option.