ANZ Bank issues 90 day commercial paper in the US market with a face value of USD25 million at 1.75% p.a. They use an FX swap to hedge their FX exposure. (For the U.S. use a 360-day year but assume simple interest calculations).

Required: (a) Calculate the forward rate component of the FX swap if the spot rate is AUD/USD 0.7300 and the Australian interest rate is 3.5% p.a.;

(b) Calculate the AUD proceeds from the commercial paper issue and the AUD amount required at maturity;

(c) Calculate the effective interest rate paid by ANZ Bank.