Assume the following information regarding U.S. and European annualized interest rates:

Currency	Lending Rate	Borrowing Rate
U.S. Dollar ($)	6.73%	7.20%
Euro ()	6.80%	7.28%

PNC bank can borrow 20 million. The current spot rate of the euro is $1.13. Furthermore, PNC bank expects the spot rate of the euro to be $1.10 in 90 days. What is PNC bank's dollar profit from speculating if the spot rate of the euro is indeed $1.10 in 90 days? (24 points)

Show the following six intermediate steps to your solution and explain each step.

1. Borrow:

2. Convert:

3. Invest the amount at an annualized rate for 90 days:

4. Determine the amount owed:

5. Determine the amount needed to repay the loan:

6. The profit is: