First off, for Strategy 1 we have an initial investment of $X with an expected return of X(1+r₁), where r₁ is today’s one-year rate. For Strategy 2 on the other hand we have an initial investment also equal to $X but with an expected return of X(1+f₁) where f₁ is the forward rate for year two starting from today (at t = 0).

Therefore, mathematically speaking we need to find the value of f₁ such that X(1+r₁)=X(1+f₁); or equivalently f₁=r₁+(X/X)-1; meaning our desired forward rate is simply going to be equal to today’s one-year rate plus any potential appreciation/depreciation over this period (minus 1).

As such then, if we assume that r₁ is currently 3% and there will be no changes in price levels during this time frame then our desired forward rate for year two starting from today (at t = 0) would be 4%, making us indifferent between Strategy 1 and 2.