10.) I need to understand the steps on how to do this problem. the answer is already in picture just trying to understand how to get to that. thank you!!!

Use this information to answer the question below: - The "spot rate" (current exchange rate) is Z1.98/$ - The annual risk-free borrowing/investing rate in Country Z is 5.91% - The one-year forward rate is Z2.05/$ If there are no transaction costs, what must be the annual risk-free borrowing/lending rate in U.S. for no covered interest arbitrage opportunity to be available? Assume that you are an American investor (so your cash is currently in U.S. dollars). Write your answer out to four decimals - for example, write 3.05% as .0305 . Answer: For no arbitrage to be available, the borrowing/lending rate needs to be the same in the U.S, as it is in Country Z. Thus all you need to do is figure out what the borrowing/lending rate is in Country z when you take into account currency conversions. The correct answer is: 0.0229