3. Megahurtz International Car Rentals has rent-a-car outlets throughout the world.

It also keeps funds for transactions purposes in many foreign countries. Assume in 2003, it held 100,000 reals in Brazil worth 35,000 dollars. It drew 12 percent interest, but the Brazilian real declined 20 percent against the dollar.

a. What is the value of its holdings, based on U.S. dollars, at year-end?

(Hint: multiply $35,000 times 1.12 and then multiply the resulting value by 80 percent.)

b. What is the value of its holdings, based on U.S. dollars, at year-end if it drew 9 percent interest and the real went up by 10 percent against the dollar?