Solving for u, the upper node

Hi,

In the ASM Manual, under the Volatility section on page 66, u is given as

u=e^[(r-δ)h + σ√h]



However, on page 92, in the solution to Example 4E

(A 3-month American call option on a futures contract is modeled with a 3-period binomial tree. You are given

i. the binomial tree is based on forward prices

ii. the continuously compounded risk free rate is .05

iii. the strike price is 60

iv. the futures contract price is 60

v. σ = .3),



u is given as

u=e^[σ√h]



How do you know which u formula to use and when?



I came to this question when I was solving Exercise 4.1, and used the latter u formula above instead of the former, and got the wrong answer.



Thanks!

Solving for u, the upper node