Assume that you can borrow up to $1,000 or 800 and you observe the following:

Spot exchange rate S($/) = $1.25/

360-day forward rate F360($/) = $1.40/

U.S. discount rate i$ = 3%

British discount rate i = 1%

Determine whether an arbitrage opportunity is possible, and the arbitrage profit in dollars in such case. Clearly indicate the steps you would take to realize the arbitrage profit.