An Australian speculator observes the following current rates and prices today:

• the spot exchange rate today: AU$3.00 per euro;
• the one-year nominal interest rate on bank deposits in Australia: i($) = 2%;
• the one-year nominal interest rate on bank deposits in Germany: i(euro) = 3%; and
• the one-year ahead expected exchange rate: AU$2.94 per euro.

Assume that the speculator can borrow either AU$3.00 thousand in Australia or 1 thousand euros in Germany. The annual saving rates in the two countries are the same as the borrowing rates. Calculate the expected profits of the speculator in one year using the markets. The answer should have the amounts of (expected) transactions and the expected profits (rounding to zero decimal places) in one year in AU$. Show all working to get full marks. (3 marks)