A company is concerned about rising interest rates and approaches a bank to hedge this

risk. The company enters into a $1$:$4$ FRA at a rate of $4\mathrm{.}5\%.$ A month later the spot rate is

$5\mathrm{.}00\%$ and the company issues $$100$ million $($face value$)90-$day bills. Calculate the effective

interest cost on the planned issue next month of the $90-$day bills