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An American firm owes 7,879,071 British Pounds payable in one year. The current spot rate is $1.493/pound. A UK bank is paying 3.5% on deposits

An American firm owes 7,879,071 British Pounds payable in one year. The current spot rate is $1.493/pound. A UK bank is paying 3.5% on deposits or will lend at 4.7%. A US bank is paying 5.1% on deposits or will lend at 6.2%. The firm will hedge this exposure with money market hedging. What is the effective exchange rate?

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