(10 points) Suppose that you have $100,000 in funds available for arbitrage opportunities and see the following quotes:

Quoted Price

Spot rate of British pound $1.25

90day forward rate of British pound $1.23

90day British interest rate 5%

90day U.S. interest rate 3%

Given this information, how much could you profit from using covered interest arbitrage? (Assume the market will not adjust before you complete your transactions.)